[This Transcipt is Unedited]
ADMINISTRATION SIMPLIFICATION UNDER THE
PATIENT PROTECTION AND AFFORDABLE CARE ACT
NATIONAL HEALTH PLAN IDENTIFIER AND
OPERATING RULES FOR ELIGIBILITY AND CLAIMS STATUS
Hamilton Crowne Plaza Almas Building
1315 K Street, NW
Washington, D.C.
P R O C E E D I N G S (9:00 a.m.)
Agenda Item: Welcome and Introductions, General Remarks
DR. WARREN: Let's get started. This is day two of the hearings of NCVHS' Standards Subcommittee and today we are going to be hearing about operating rules. Before we begin I would like to remind people who are in attendance, in the interest of time we are not going to pass the microphone for those who are here, but please be sure to sign because we do need to post the attendance in our minutes and stuff so everyone knows - part of our transparency kind of thing.
With that I would like to have introductions around the table. For committee members please let us know if you have any conflicts of interest.
I am Judith Warren. I am co-chair of the standards committee and member of the full committee and I am from University of Kansas School of Nursing and having no conflicts.
DR. SUAREZ: Good morning. I am Walter Suarez with Kaiser Permanente. I am a member of a committee and I am also a member of a few organizations that have testified and will be testifying. One is WEDI, Workgroup for Electronic Data Interchange, I am a member of the board of directors. I am also a member of the Public Health Data Standards Consortium board, and I am also involved in the standards developing groups -- HL7.
DR. OVERHAGE: Good morning. Marc Overhage, Regenstrief Institute, Indiana Health Information Exchange. I am a member of the committee and no conflicts.
DR. FITZMAURICE: Hi, Michael Fitzmaurice, Agency for Health for Healthcare Research and Quality -- staff of the subcommittee on the standards and subcommittee on quality.
MS. AMATAYAKUL: Margret/A, Margret/A Consulting, contractor to the committee.
MS. DOO: Lorraine Doo, Office of eHealth Standards and Services at CMS. Lead staff to the committee and no conflicts.
DR. SCANLON: Bill Scanlon, National Health Policy Forum, member of the committee, no conflicts.
DR. CARR: Justine Carr, Caritas Christi Health Care, chairman of the committee, member of the subcommittee, no conflicts.
MS. GREENBERG: Marjorie Greenberg, National Center for Health Statistics, CDC and executive secretary to the committee.
DR. WARREN: Before we start with the panel -- just a quick check of someone who is not here who is on our agenda. Walter Suarez and I met briefly with Lorraine and what we would like to do is let people know what our plans are for Wednesday morning because several of you have volunteered to help. We are taking you up on that.
It occurred to us that one of the things that would really help us in constructing our recommendations to the Secretary is if we had use cases about health plan IDs, especially one with a bin in it. We remember Glen. That is what we would like to do for the first thing in the morning is really use your expertise for us to come up with all the different ways that people know that the health plan ID is used and develop use cases around those.
The other thing that we thought would be helpful is if we could develop a graph that tracks the money. In other words, what money is attached to that plan ID, how do people get paid, and how do they request to get paid, so that if we could develop a graphic of that flow, I think that would also help as part of the appendix of the letter to really help us clarify what the plan ID is used for, what it is and what it isn't, who qualifies for one and who doesn't, so that we answer that granularity issue. And then if anybody has any other ideas besides the use cases and the graphic, please let Walter and I know. We are more than grateful for assistance in this.
Today we are going to be talking about operating rules and I want to start out to remind both the subcommittee, our staff, and then all the attendees, what NCVHS' charge is in these rules. Right now our charge is to advise the Secretary as to whether a non-profit entity meets the requirements under paragraph two, operating rules developments, to review operating rules developed and recommended by such a nonprofit entity, determine whether such operating rules represent a consensus view of the health care stakeholders, and are consistent with and do not conflict with other existing standards. And then to evaluate whether such operating rules are consistent with the electronic standards adopted for health information technology.
A plan for the letter for both the health plan ID and for the operating rules and will be writing a letter for each one so two letters is to have that to the full committee of NVCHS at their September meetings. We are on a very fast timeline, and that is so that we can meet all the other deadlines that are specified in the legislation just so that people are clear.
And then what I would like to call attention to is in the packets of the committee members and staff, Walter I have worked with, Lorraine. There is a packet in there called operating rules and national health plan identifier, options and considerations. It is a fairly thick packet. It looks like this. A gray bar on the top. The front page are all the questions that we have sent out to our speakers so that you know what they are answering and then after that there is a worksheet. We really felt that we needed to be sure that we captured all of the testimony is accurate as it can. That worksheet is there for your use for giving a better way to keep track of your ideas, feel free to look at that as well.
The next thing is Lorraine is going to be giving Karen Trudel's opening remarks. While she sets up what I would like to do is remind the panel Lorraine is our time keeper. Please watch. She has worn a pretty dress today so that you can see her. She told me to tell you that. She is dressed for the event. We are giving everybody 20 minutes, and then after your presentation the committee will ask you questions. We will take 10 to 15 minutes. We have a little bit a leeway that if we need more information from you, we can do that and then we will go on to the next set of presenters. Any questions from the panel about how we are organized? Okay, Lorraine.
MS. DOO: Good morning everybody. How many of you were here yesterday? Okay we are done. For some of you there will be a test if you were here yesterday on what I am going to say, and for the others in all fairness just to give an overview of where we are today and why we are here. The Patient Protection and Affordable Care Act as you all probably read all 2057 pages, we have a small section called 1104 and 10109 relating to administrative simplification.
The Act has in it, even though it is called administrative simplification and even though we are a fairly small piece of the entire legislation, has some pretty significant implications. There are some main things that we are going to have to do over the next very short timeframe. One is we were talking about yesterday, is to adopt our unique health plan identifier. The other is some new standards and operating rules for those standards to adopt a standard for EFT and to require that Medicare pay all providers via EFT, which means all providers will have to accept EFT, electronic funds transfer payment.
There will be a compliance certification which is different than the enforcement methodology that we have today where plans will have to certify their compliance and we have some fairly stringent penalties that can be applied for lack of compliance.
And then there are audits. And again, right now our complaint system as you all know is really voluntary compliance and it is complaint driven. We will be doing much more proactive audits related to that. And then taking a look at the existing standards and operating rules to see if there is any way that we can do them better if we need to expedite. Everybody would volunteer for.
And then also to adopt as if it were a standard an ICD-10 crosswalk, and some of you have probably been involved in some of the meetings that have been held on that topic. I think there is going to be one in September related to that.
If you look at the next slide of our dates, it is a fairly aggressive timeline, which is why Judy and Walter are nervous. We are going to be doing Interim Final Rules. It is not the regular notice and proposed rule-making process, it is Interim Final Rules, and our first two come out in July and August of next year, one on the first year operating rules for claims status and eligibility, and then for the plan identifier. The effective dates are no less exciting, October 2012 for the plan ID, and January of 2013 for the operating rules.
And then it doesn't get much more civilized with the standard for the electronic funds transfer and the operating rules, those are in 2012. And then we down for the next grouping of operating rules into 2014 for claims attachment, which some people will be very excited about and then for the other, standards.
The dates are very aggressive which means these hearings are going to be on an aggressive time table as well, which is why these are so critical.
Our strategy for executing the Affordable Care Act as it has been other standards, is we do these hearings which means we get public input and we have had -- yesterday was a very full day, today will be a very full day. It is the best way to really get at what information we need to have from the industry in terms of the challenges and the opportunities and the costs. What we will do as we have been doing, is to really see what is happening with industry's engagement in this process and looking at how these standards and operating rules have been developed and making sure that we have consensus and collaboration, and also to make sure there are a number of other areas in the Affordable Care Act that are related to our work. It doesn't seem obvious on the surface, but there actually are connections. We will be looking to make certain that we are collaborating with other areas of the department and other federal agencies, to make sure that we are being synergistic with those other provisions.
And as we have heard over and over again, we have to do a lot of education and outreach with the industry along the way so that we are making sure that we understand what the challenges are and if there are any other changes or course direction that we need to make.
The drivers for the Affordable Care Act is what Congress recognized is that we needed to continue to move forward with what we were doing with standards and obviously operating rules, and to make them work better for us. This was moving this ball down the field of really getting to administrative simplification and standardizing the standards. I am sure many of you have used that and wished the standards were more standard. That we needed to use them more consistently and that we also needed to add t our portfolio. We had many good standards, some of which were being used fairly well in the industry and many which were not. We still know that they are not being used as aggressively as they could be, but things like electronic funds transfer is clearly a value added to the industry. We didn't have the requirement without the standard for that.
And making the rule-making process more nimble by virtue of the fact that we are now able to do interim final rule making has clearly built that opportunity and challenge in front of us. And then to build on the successes and lessons learned and yesterday was a great example because a number of people came forward and gave terrific information about what we have learned from implementation of the provider identifier and how we can leverage that for what we do for the health plan identifier.
In the Affordable Care Act the Congress wisely we hope with some guidance from our office, but I think from many, many conversations with many of you revise the statement of purpose for what we are supposed to do in administrative simplification and so if you look at the purpose obviously is for effectiveness and efficiency and improve the Medicare and the Medicaid program that talked about the establishment of the uniform standards and requirements. This is really getting at the standardization of the standards of really making these tools useful for and by everyone.
And then it goes on to talk about administrative simplification, reducing the clerical burden on patients, providers, and health plans. And that is what you all are here to help guide us in is how do we get rid of those clerical burdens. We are in the 21st century. Most other industries have been very successful and we are getting there, but they are saying we have the opportunity to do more.
There are pretty specific guidance from Congress and also as Karen calls them, these were clues or hints as to what we could do more of and better, and one of them is the determination of eligibility and financial responsibility prior to or at the point of care. And anyone who has ever been in the physician's office knows what a value add that could be for both a physician as well as the patient.
Also being comprehensive and requiring minimal augmentation so that we don't have to resort to faxes, paper, or phone calls, the point of electronic transactions to do that communication.
Also being timely and transparent, making sure the people have information at the point of which they need it in order to make certain decisions. And then being able to describe all the data elements in unambiguous terms and that in part goes to our issue having consensus and collaboration that everybody has different needs and needs to apply them, but we have to get to a point where we come to agreement on what those terms mean and how they are going to be used. We have very clear direction from Congress on this.
The context of these hearings is using the guidance that we have seen and the guidance that we have had from Congress in the past, is how we will develop new standards that we need to, how we will ensure a consensus stage process and really move towards this whole concept of effectiveness and efficiency, and then how we actually move in that direction, how we actually get there, how do we move the ball around the field, how do we encourage the reduction of the burden on everybody, and again we are talking not just providers and plans and clearing houses, but also the patients, and really ready us for this next stage as we move towards the electronic health records and the provisions and meaningful use legislation. All of these things are going to be required of us in order to get there together.
The identifier -- I am actually going to not dwell on this and I will try and move forward, but yesterday we did talk about some of the opportunities for health plan identifier. The key for that is that it be usable for multiple purposes. We are not just talking about how do I put it in this field in this standard, but all of these other ways in which identifiers may now be needed in electronic communications and transactions and systems. That multiple uses is this something that will be a significant conversation tomorrow?
And what we did hear, aside from what Lynn was talking about, is don't get rid of the bin is that we have a diverse set of types of health plans, first needs for that, and diverse uses. We are going to have to come to some consensus on what the best way is going to be to use that for the standards and for the next set of requirements.
We will move past that slide and talk about operating rules which is the agenda for today.
This is how it was defined in the legislation. It is a fairly simple definition. What are the necessary business rules and guidelines for the electronic exchange of information that are not defined yet in the standards themselves or the implementation specification? That is pretty broad. What we are going to look at and this is what Judy was reading from the charge to this committee, is adopting a single set of operating rules for each of the standards and we are doing two in this process, but they have to be consensus based, as are our current standards. That is a requirement for our current standards is that they are consensus based and that they reflect the needs of all of the covered entities and all of the players in the industry.
They have to be developed by a non-profit entity based on a recommendation of the Secretary from NCVHS and ensuring consultation with providers. That is actually the first time that we have seen that specific reference that we have to ensure consultation with providers in our legislation. It is obviously something that the authors are paying attention to as well as the industry.
As we said this is similar to the chart that we reviewed before. We will focus on eligibility and claims status, but I think it is important that we will gain some learning from these hearings so that when we move into the next set we will be able to benefit from that.
Just a reminder, that the compliance date is a term that is used in the legislation, is effective date. When you see effective date in the legislation, it now means compliance date. Those terms are going to be used interchangeably. We do have to adopt two new standards. Again, that is for EFT and for planned attachments. Those will be ones we don't have adopted yet.
A couple of things to remember, we do not have to select one authoring organization this week that will be the authoring organization for all standards. There may be different authoring organizations for different standards for the operating rules and because other entities and organizations will be coming forward and saying we have an idea for what operating rules can be for this. And it does give us an opportunity to relook at how we have done collaboration and consensus building to really look at doing it better than we have in the past, not that it has been bad at all. I think the voluntary effort is extraordinary, but we have an opportunity to look at the way we have been doing things and to move ahead in a new way.
I want to thank you very much for coming again in standing room only. I think we have a couple of chairs in the front actually, and I will let the meat of the presentation begin. It is much more interesting. Thanks so much.
DR. WARREN: I forgot to ask who was on the phone. We didn't hear you. Can you say again?
DR. FERRER: Jorge.
DR. WARREN: Thank you. Jim and Karen have joined us if you would like to introduce yourselves.
MS. TRUDEL: Good morning. Karen Trudel, CMS, staff of the subcommittee and liaison to the full committee.
DR. SORACE: Hi, Jim Sorace, ASPE staff to the subcommittee.
DR. WARREN: With that we are ready to begin. Gwen, when you are ready.
Agenda Item: Panel B1: Presentations from authors of operating rules and standards
MS. LOHSE: Good morning, Gwendolyn Lohse from CAQH. I am the CORE managing director and also the deputy director of CAQH. Let me begin by thanking the committee for the opportunity to speak to you on behalf of CAQH. We have worked together for the last five years to develop the first three phases of CORE for the Healthcare Information Exchange.
In addition I would like to recognize today's discussions that have been provided by HIPAA. Many organizations have had roles in the implementation of HIPAA, but most important of them, NCVHS and the standards setting organizations. Without NCVHS we would not be here to support the national initiative that will drive administrative simplification.
In my presentation this morning I won't be able to touch upon a few of the many details that were included in my written testimony. Let me begin by briefly summarizing three key points that I hope to leave you with. First, we have a unique opportunity to address administrative simplification; however, we need long-term commitment to clear and experienced-based themes to ensure long-term success.
Second, standards and operating rules must coexist and work together to achieve the full potential of administrative simplification. Third, all our experience informs us to the highly integrated model will expedite the transformation of administrative data exchange.
Having giving you these points let me get into some of the details beginning with a little context. CAQH is a non-profit alliance focused on simplification of administrative processes in healthcare. We have a vision of an American health care system in which administrative processes are efficient, predictable, and easily understood by patients, caregivers, and by providers.
In this system administrative and clinical data are fully integrated to effectively support the delivery of care. HIPAA established a foundation for administration simplification and initial standards began to advance the electronic exchange of administration and claim information; however, the standards were not always implemented in a uniform manner. The health care environment continues to evolve rapidly and we are responsible for driving change across the industry had not experienced the value initially anticipated by HIPAA.
Five years ago CORE established CAQH. CAQH established CORE as a multi-stakeholder collaborative to address the needs of providers and health plans, to exchange more robust information in real time.
CORE is the only national effort engaged in the development of operating rules to facilitate medically focused administrative transactions. It brought this concept to health care based on experience from other industries in which streamlining business processes have become imperative such as the banking industry.
In these other industries operating rules and standards coexist and work together. The Affordable Care Act through Section 1104 has made amendments to HIPAA. These amendments provide for more comprehensive approach to administrative simplification and specifically we have the definitions Lorraine provided us this morning. I am not going to walk through them.
The industry is to move forward collaboratively to meet the intent of the associated timelines laid out in Section 1104. We have the opportunity to massively reduce administrative overhead that burdens the US health care system.
CAQH CORE and the CORE participants stand ready to work in full collaboration with NCVHS, the SDOs and the other committed entities to take advantage of this moment in time.
Today's hearing is focused on how HHS can address the aggressive timeframes for the development of the first operating rules. Those are related to eligibility and claims status. There is significant pressure on organizations to address internal business strategies, as well as meet industry-wide and legislative requirements while improving infrastructure and lowering costs and while doing so in the limitations of resource constraints.
Any change driven by 1104 will need to consider the framework in which all organizations are working. Meaningful change will also need to align with a broader health care environment; HITECH being one of the key examples where that is critical especially for providers.
In light of these imperatives unproductive replication of effort can no longer be sustained. Every entity involved will need to be looking for ways to take the greatest advantage of industry expertise and vision for every component of the overall process.
In June of this year NCVHS issued a concept paper highlighting how administrative data exchange must play within the broader context of health care. CAQH is in complete agreement with this philosophy.
In a written testimony offered detailed explanation of the reasons why operating rules and standards need to coexist and work together. We would like to give you just one example of where this already has occurred: the banking industry.
When CORE was conceived, we worked with NACHA, the electronic payments association to learn from their experience in the application of operating rules and standards together in that highly regulated industry.
The effective use of credit cards and ATMs have revolutionized banking processes for every one of us in this room, but the ability to conduct that transaction that underlie the use of such tools relies on understanding the difference, but interdependence role of standards and operating rules. Standards established the outlining and detailed technical framework for transactions. Operating rules build on the standards to more precisely describe the roles and responsibilities of each of the individual stakeholders. They also address gaps in order to deliver on the market value of the transactions.
To give some additional context standards and operating rules together bring a real return on investment and interoperability. Operating rules should always support standards. The skill sets and resources necessary to develop and implement operating rules are different. In health care operating rules need to support a range of standards including non-mandated aspects of HIPAA, such as those supported by the CORE financial data elements, non-mandated health care standards, such as those supported by the CORE acknowledgement rules, and mutual standards, such as those supported by the CORE connectivity rules.
It is also important to note the current CORE rules including the draft phase three rules are in compliance with existing federal mandates including the ANSI X12 standards.
Let me now focus on the structure of CORE. For the integrated model is that it is applied to develop and implement the rules. CORE's mission is to build a consensus among essential industry stakeholders on a set of operating rules that facilitate administrative interoperability starting with eligibility and then moving sequentially the other transactions in the claims process.
CORE's vision is a sole provider access to administrative information before or at the time of service using the electronic system of their choice of the provider for any patient or any health plan.
CORE is compiled of organizations from across the health care spectrum including SDOs, government entities, for-profit and non-for-profit health plans, provider groups, hospitals, vendors and consultants. CAQH is the facilitator of the CORE initiative.
CAQH takes no part in voting. It has no authority with regard to approval of any of the operating rules. We recognize the original CORE governing procedures. We have given that CAQH has the right to veto specific operating rules. This right was eliminated earlier this year and in fact its application was never considered by the CAQH board.
Let me move on to discuss the CORE integrated model in which has been developed by three key components: a rule development and writing process inclusive of the voting process, education and outreach designed to build awareness of CORE rules, and inform CORE participants about other initiatives that align with the objectives, and a certification and endorsement process. This integrated model has led to a series of clear, tangible outcomes in a very compressed timeframe.
We look at the section of 1104 and we ask ourselves what exactly has CORE accomplished over the last five years as relevant to the goal of this legislation. I am going to use the next few slides to address that.
First, we have built a multi-stakeholder initiative driven by strong guiding principles with transparent processes for approval at every rule and every modification along the way. We now have more than 115 participating entities from all sectors of the industry including health plans that represent almost 75 percent of the commercially insured lives in America.
Bringing all of these organizations to the table and keeping them there has been no small accomplishment. In appendix B of our written testimony you can see the CORE participants. We have kept participation costs low. Annual fees for SDOs and public entities are waived. Others are capped at $6000 per year even for the largest commercial entities.
The rule development writing approval process is built on the elements of best practice, industry alignment, and balancing vision with reality. Details about these processes and the guiding principles are available in our written testimony. Moreover, each rule is developed with recognition of the interdependencies among the rules within individual organizations and across the stakeholders that must exchange this data. The time and effort to create each rule cannot be underestimated.
Including in the CORE guiding principles is the important of tracking financial and non-financial benefits. An early doctors' study of the use of the Phase I rules and their impact on certified health plans, vendors, and providers showed that a 10 to 12 percent reduction in provider claim denials, a 24 percent increase in patient eligibility verifications, an average cost savings of nearly three dollars for each phone call related to patient eligibility verification, accelerated use of electronic transactions by all participants, and estimated cost savings of three billion in three years have also most of the industry adopted the Phase I rules.
Finally, education and outreach have been on the cornerstone of the overall CORE initiative. This begins with building awareness and flows through to specific tactical opportunities. We conduct detailed analyses on individual or clients for organizations seeking certification. We have worked closely with WEDI and HIMSS on a range of traditional activities and have conducted demonstration projects and pilot projects. A current example is the digital certified called pilot project. We are conducting with VeriSign in Massachusetts, including health plan providers and vendors.
We have developed a range of tools for certified -- use of their trading partners and to address such matters as request for proposals and contracts.
We have worked hard to coordinate and gain recognition for important federal and state efforts. Lorraine's comment this morning about coordination could not be more relevant.
The timeline allotted for the substantial outreach to the federal and state efforts is substantial and is aligning efforts around the country as you can see on the slide.
Finally, from resource and budgetary point of view today CAQH covers 85 percent of the CORE costs and it brings important executive level awareness. The degree of CORE's progress in such a limited period would never have been possible without the time and experience committed by the participating organizations as well as full time and contracted resources that CAQH was able to bring to the initiative. The magnitude of this effort is dependent on a high level of resource commitment.
Since 2005 CORE has developed and rules out the Phase I and II operating rules and has prepared Phase III operating rules for release later this year. Many of the CORE rules to date are specific to eligibility and claims status as projected and long-term roadmap.
Each of these rules and their specific benefits is outlined in our written testimony. As indicated on this slide, the rules can be categorized to include infrastructure, claims status content, and eligibility content. Each rule includes requirements to certification testing.
CORE has been a voluntary effort. Entities becoming certified have all the best intention. However, it was agreed upon from the beginning that testing was necessary to ensure compliance and certification as was adequate staff to guide entities through the process.
The core certification testing is conducted by independent testing entities based on conformance requirements and tests approved by the CORE participants. Today over 50 organizations are Phase I or II certified.
The Core Phase I and II rules are already being applied to almost 50 percent of the commercially insured as a result of the CORE certified health plans. Endorsements build awareness. CORE rules have been endorsed by more than 30 organizations including provider organizations such as the AMA and the AAFP. These entities are not eligible for certification, but their endorsement is critical. The cost of certification is kept low with a one-time fee of certification for each stakeholder type that is capped at $6000 per certification phase.
Up until now I have reviewed where CORE has come from and what has been achieved; however, it is very clear to us that for the CORE model to be adopted for the development and implementation of operating rules in a mandatory environment specific adjustments will be essential.
CORE and CAQH are ready to work with NCVHS and the broader industry to define and implement these adjustments. We believe the work must occur as soon as possible.
Potential adjustments that have been widely discussed include changes to the structure of the organization including modifications to its governance and leadership, expansion of the number and types of participating organizations, a financial structure for the initiative that assures continuous stability particularly something with unfunded mandate.
Revisions to, and reassessment of the scope, the content and the development of the rules recognizing the perspectives of various new participants. A timely reassessment of the current voting process for rules and development approval, and finally, new mechanism for education and outreach. As an example, HITECH may be able to provide support in this reason and we need to coordinate with those direct centers.
Collaboration has been at the very heart of CORE from day one including the involvement of SDOs and others such as MGMA, WEDI and EMA.
Going forward should CORE be selected we need additional resources and these resources will enable the development expanded skill sets, tools, processes, and distribution channels that will be required to make this successful. To address this need properly CAQH will partner with HIMSS and NACHA. NACHA, who I mentioned earlier because they have an experience working about 15,000 institutions in the banking industry.
This particular partnership would focus on facilitation and implementation and the CORE participants would retain complete control over the development, writing and approval of the operating rules and the criteria for certification of appropriate organizations. We are delighted that HIMSS and NACHA have agreed to work closely to support CORE. They bring deep expertise that speaks to the magnitude of this effort.
To produce meaningful operating rules there is significant lead time to activities such as business case development, research, gap analyses, et cetera. CAQH is ready to address eligibility and claims status; however, a united effort must be started on the future stages of Section 1104: electronic remittance advice and electronic funds transfer. The partnership with HIMSS and NACHA is poised to begin this work on these long-term imperatives.
Several times this morning I made reference to the importance of thoughtful guiding principles. On this slide we have outlined recommendations for a series of themes that can guide the industry to successful outcomes. The importance of long-term clarity of purpose, commitment to a strong underlying infrastructure, sensitivity to market realities, the value of understanding and taking advantage of lessons learned already.
This slide includes too much detail on each of these themes. It would take too much time to go through all of them, but I would like to highlight one example that speaks to translating the themes into daily practice. Let me use the example that relates to the sensitivity of market readiness. Build on what exists. Don't replicate what already works and don't reinvent the wheel. When developing the business cases for each CORE rule, substances, and strategic analyses have always been used to highlight how CORE can embrace well tested and tried practices. This must continue.
I began this testimony by speaking the three points that I want to leave with you today. Let me come back to these points. First, we have a unique opportunity to meaningfully address health care administrative simplification; however, we need to be committed to clear and experienced-based themes to ensure long-term success. Second, uniform standards and operating rules must co-exist and work together if we are to achieve the full potential of the administration simplification. Third, a highly integrated model will expedite the transformation of administrative data exchange.
In conclusion, I will leave you with one final thought. Collaboration and alignment will be the foundation on which we can expand and sustain the momentum that CORE has brought to administrative simplification. We understand there are differences of opinion as to how to address the challenges that we were working to resolve, but the time has come for us to work together on a bigger vision based on solutions that are effective and efficient in the real world. The timeline for Section 1104 can be realized if we build on what exists today. Thank you for your time and please let me know if you have any questions.
DR. WARREN: I have one question -- just for my clarity from CAQH's perspective, could you distinguish between operating rules and companion guides?
MS. LOHSE: Operating rules and companion guides. We did have a CORE Phase I rule and a Phase II rule on companion guides. The companion guide is the flow and way of the format that each entity presents the way in which it does transactions. It includes a whole host of things beyond the transactions. It may include customer service numbers. It may include addresses and items like that.
There are sections of the companion guide that will directly refer to the operating rules. With that said we believe that every companion guide, the flow and format, the table of contents should look very similar for the provider. We have created a rule that is based on companion guides and it speaks to the flow and the format so they are all the same. It is reviewed in the testing and certification and the sections that are specific to the transactions as we go to this iterative process of operating rules, those sections should be referring to the operating rules.
If you look at -- you will hear from Jan later from NACHA. ACH has a very large guide with its operating rules and the entities. The 15,000 entities of exchange data in the banking industry refer to that guide and one could make some comparisons with a companion guide on that.
DR. CARR: Thank you. Very excellent testimony. The entities that do not belong to CORE, what are the major reasons why they do not?
MS. LOHSE: Great question. I think one: resources. Resource constraints are a real reality today and even more so as we move forward. We have many different parts of the reform bill coming out. We have HITECH coming out. Many entities are dealing with the HIEs and not really embracing those and then we also have ICD-10, we have 5010 and then we have state regulations which -- I know there are a number of entities from the states here today and they can speak to that more, but I really believe it is resource constraints is a matter of prioritization.
DR. SUAREZ: I have like 20 questions. I will start with the organization. Thank you very much for the testimony. I think it is great. I have gained a lot of clarity and understanding about the organization. A number of the questions around the type of organizations that would be qualified, authorizing organizations include of course openness and participation. In other standard development organizations that I have been part of there has always been a lot of engagement and there is a challenge of engaging organizations into dose by those efforts because of resources as you pointed because there is always large opportunities for open, common processes and all that. Could you walk us through the process itself of we are going to develop an operating rule on X. We have a team that is -- how large it is first of all that develops because is it all volunteer? Does that actually work on development of the actual document that becomes the operating rule? What is the process and how long does it take? And then what the vetting itself that you do in terms of once you have the final document, how do you make it be the final document if you will?
MS. LOHSE: Great question. First selection of what is actually in the scope. When CORE started out we obviously needed some place to start. CAQH did select the scope in the first phase. It lets a woman to the second phase because then it gets much more representative of what we are talking about moving forward. The CORE participants then decided the second scope. They did this through a multi-voting exercise, phone calls, and a host of things. For instance, the AMA was very clear they would not endorse CORE until we had year to date deductibles. We didn't put year to date deductibles in the first phase because we thought you could only achieve so much so quickly. They went into the second phase and AMA was really responsible as well as many others for making sure that that occurred. The entities select the scope.
We then farm out the responsibilities of each of the rules to subgroups and there are chairs for the subgroups. They volunteer. And then entities from the CORE participants participate in those subgroups. Before the subgroups actually get started, we spend considerable amounts of time providing tools and research that they can start out with very strong business cases, gap analyses, and make sure that we have the right people at the table. If we are talking about, for instance, the acknowledgements that X12 has done such a great job of creating, we make sure that people that are creating the acknowledgements we invite them to the calls. We talk to them beforehand. Throughout the process you have a number of participants that are at the table that are experts as well as the staff that can spend their full time supporting those experts and the participants to continue to evolve the detailed analyses that are required to write the operating rules.
There are many things such as response time. We had to do a lot of surveying. It is all blinded. It is all aggregated. We do not share any details on individual companies. There needs to be staff that goes across. Corrects whether it is clean status business codes, whether it is response times, whether it is companion guides. It does that whole analysis. It presents it to the subgroup and work group. And then they debate and then they decide and prioritize what to keep in and what to keep out and that usually takes months and months of debate. There are many different versions the draft rules by the subgroup. Then it slowly works up to the work group and then the work group obviously has comments. There is a lot of straw pulling before the actual official voting happens. We probably do six or seven stages of straw pulling and that has to have staff support obviously and it could make some big changes to the rules during that straw pulling.
And then there is a work group vote. And then it moves up to the steering committee to make sure there is then appropriate alignment among the stakeholders and also appropriate alignment with external factors. And I talk about external factors a lot. I think Lorraine's overview could not be more appropriate. We have to align with other efforts in the industry, for instance, the CORE connectivity rule is aligned with what happened with HITSP and NHIN, and we can't operate in a bubble. You need staff to do the research to present it. Steering committee checks that and then it goes for the all CORE vote.
The all CORE vote is different than the previous votes in the sense that it is only the entities that actually have to use the rules and their daily business practice that does that final vote. Before that every entity can vote. It is the health plans and the providers and the vendors that do that final vote. That is a very long -- hopefully you wanted a long reply, but that is generally how the process works.
You asked about the number of people. I think you really truly this well. At a minimum you need six staff people to support each of the rules in various different places. You need some people that have the technical requirements. Other people -- there is an individual here who works with us that she knows revenue cycle. You need people that know the detail, the business process and then you need other folks that are able to do all the surveying and the analysis and of course without support staff the whole thing can't happen. You can't have phone calls. You can't have meetings. You can't have dial ins. The support staff is absolutely essential.
DR. SUAREZ: In terms of the membership of those work groups, not staff, but volunteers what would be the size?
MS. LOHSE: It ranges. Some of the groups -- for instance, when the eligibility started they were up to probably 75 percent of the participating organization sat on that group. Some attend all the time. We make everything available off line. We make everything available on line. Some people just can't afford the time at that moment. They review it at another time and provide feedback at another time. Typically about 70 to 80 percent of the entities that are at the table participate. If someone does not attend the meetings, we have not asked them to move off and not vote. I know HITSP did take that approach and we have not taken that approach.
And then some of the groups like connectivity tend to have a higher volume of participants that have a certain level of expertise depending on the topic.
DR. SUAREZ: Just a follow up. Once that the rule is done they have a testing period and an open review of the defined set of rules before they get --
MS. LOHSE: Absolutely. Could they right now -- the rules that we have are very common things that are happening in the industry in pockets. They are not happening all over the industry and I think until we get to a place where we have 85, 90 percent adoption you are not going to see the full impact and plus you need coordination between the health plans, the vendors and the providers to see the full impact.
Right now the rules that have passed have been used by entities that are at the table, and then moving forward I think you are going to see much more of piloting certain things like digital certificates. I think it really depends upon do we have items that are used in the market today by a certain percentage of entities that work like using aspects of the standards that we know are going to drive down the phone calls.
We did an analysis, for instance, across many of the health plans, but what is actually driving their phone calls and it is certain data elements that are in the standard, but they weren't mandated. The rules include requirement to use those pieces of a standard because if it is the 80/20 rule, what is going to drive down the costs and it exists and we should use it now.
DR. SUAREZ: One more. There is a critical concept. You referred to standards and then operating rules. In the middle there is this sort of thing called implementation specifications in the federal regulations and the law really. Now we have three levels of standard setting elements: the standards themselves, the implementation specifications and now the operating rules. I think the challenge is to define what constitutes this operating rule that is as defined in the law not covered already in the standards and the implementation specifications. Usually the companion guides are covering things that are in the implementation specifications, but are refinements of those definitions of implementation specifications or clarifications or constraints if you will in some cases between trading partners.
The question is really is the operating rule going to be an extension of the implementation specifications. It is going to be not just an extension, but also cover other things and what are the limitations of what should not be covered in an operating rule. I know that is a big question I guess, but it is really going to help us define. If we are really talking about operating rules to be the next concept of companion guides and as you pointed out in your written testimony one single companion guide is an example of what could become in the future I guess an operating rule. We are talking about that. What other things are there involved in the operating rules themselves that are not what traditionally is part of a companion guide.
MS. LOHSE: I am going to refer to your implementation guides versus companion guides because your question was for implementation guides, right? Okay. For the implementation guides they are specific to standards and they do allow for some variability of how to use the standard. There could be things that are optional and aren't required and the operating rules --
DR. SUAREZ: Situational.
MS. LOHSE: Situational -– right. They are situational so they are not mandated. Just as an example, under HIPAA, the X12 guide has some implementation guides. There are some situational elements. We have worked to adopt those. We support the standards and have used data to figure out if there are certain elements within that implementation guide that could be required to help get to the policy goals of administrative simplifications. I think that is going to be the ongoing iterative process.
As we presented in our written testimony, I think we are going to see as we move forward that iterative process between the standards and operating rules based upon the needs of the market. We don't know, for instance, reform is going to drive a lot of different types of changes over the next few years. Are there other elements in there that are going to be essential to drive and get to the policy goals?
Separate from that there are many other standards that are industry neutral that we are going to have to start embracing in health care and their implementation guides may not speak directly to the needs of our market place. We are going to have to work together to figure out how do you apply if it is open web services to health care. I think there is going to be a lot of work that has to be done in that area. We started that process working to align with the efforts under the NHIN, under HITSP, but there is also that aspect. The standards that are currently under HIPAA but it is also other standards that are being embraced by HITECH, by HIEs and that process is going to continue and we are going to need to find a way of an industry to make it work.
MS. TRUDEL: Gwen, I think your testimony says over 50 organizations are Phase I and/or Phase II certified. Could you split that out and also what are some of the critical aspects of Phase II over Phase I?
MS. LOHSE: Absolutely. For Phase I -- I will run through the critical aspects first because that might be easier. Phase I was eligibility focused and this was based on a long-term plan. You can't have a silver bullet to fix everything over night, we wouldn't get anyone to the table. We did pick out data elements within the transaction that were driving some of the questions and the phone calls, so co-pay deductible co-insurance for a number of the high volume services.
Then paired that with the requirement for sending everything in real time and there was a lot of debate of what does real time mean in Phase I. We picked 20 seconds and I know PNC was on the steering committee at the moment and they said 20 seconds, you mean two seconds. I said no I mean 20 seconds. We are starting out in a phase approach.
There are also requirements for acknowledgements, the format and flow of companion guides, getting onto the Internet, and then having your systems up. The providers work on weekends. The claim process needs to work where the providers work if there are inquiries coming in. You have a mix of data content as well as infrastructure to keep the transaction moving.
In Phase II we added to the data content of eligibility to get to several more services that are high volume, again, based on significant research. And then more financials like year-to-date deductibles, I talked about that earlier what the AMA is asking, and then additionally more infrastructure.
Getting onto the Internet we worked to ensure there was two plug and plays, so if you wanted to use the Internet, you had two ways you could directly do it, and then doing some patient matching and identification. Smaller things like do you use a hyphen in your name and if so, we are all going to translate the hyphens with special characters the same way. That was based on a California HealthCare Foundation study that we did. And then also infrastructure for a whole host of the claims status transactions. Again, going in real time, system availability, acknowledgements, connectivity, the companion guides. The Phase I was eligibility. Phase II was eligibility in claims status with more infrastructures.
The entities that are Phase I certified you would ask, Karen, with the health plans. There are about 52 of those. It is health plans, vendors, clearing houses and providers. It is a mix of both national plans, regional plans, non-for-profits and for-profits and the vendors are a mix of entities that are really practice management systems and also clearing houses and then providers such as Montefiore was actually Phase I certified and NAO Wake Forest. For Phase II there are a number of the entities that are Phase I. Almost 88 percent of them are committed to Phase II certification. Does that answer your question?
DR. FITZMAURICE: Thank you also for your testimony. I have two questions. You have taken on a quest for interoperability of administrative information. Do the CORE operating rules specify for a given transaction the specific vocabularies, data elements, their definitions, and representations? By that I mean their specific code set for things like marital status or race and ethnicity if it is there, standard format for name and address, and for a time. Do you work with the SDS to maintain the standards for that transaction on the definitions you choose so that your definitions are harmonized, maybe identical to those in X12, NCPDP of HL7? Do you get down to the data element level for specificity in your operating roles and you work with the SDOs to make it uniform across SDOs?
DR. LOHSE: The first response is absolutely use the standards. We are not a standard setting body and what never will be we don't have the skill sets. We have to support the standards that exist. We are incorporating and supporting the standards. Absolutely. We are not changing the definitions with data fields. They exist. We support them and there is a lot of expertise that went into that process. We have not at this point there are definitions across different standards that do need to be unified and other than in connectivity we have not started that process. I think that is something that will need to occur, but that's not something that we have started and that is going to become more and more relevant as we move forward.
DR. FITZMAURICE: Second thing. Is this a state consensus-based process? How do you find the consensus that you hope to achieve or maybe the other side is could it be not achieving a consensus?
DR. LOHSE: We do have a consensus-based process. I think you have to build up consensus from the beginning and we absolutely work towards that every single day and then the voting plays into that. I know Karen was nice enough at the end of the Phase II voting we had one item -- and you helped work through that. Absolutely consensus but then voting on top of that so there is transparency.
As I talked about layering my testimony, I think the industry will need to decide. After we go through consensus that final vote, who will be at that final vote? Is it just the health plans and the payers or do the vendors also belong there and then Walter asked about a public comment period. We have been a voluntary initiative. We have had the CORE participants doing the consensus and the voting and also reaching out to other entities. We haven't officially had a comment period. In a mandatory environment absolutely you have to have a public comment period.
I guess there is consensus I see consensus from the beginning then through a voting and then also public comment.
MS. DOO: (Mic off) Thank you for the presentation -- and I laugh at the age of the group. I have been involved in -- organizations for a while now and part of what I have learned is the extent to which volunteers are so valuable and what hard work is, but it is also very hard work to get people to the table and to get the votes and to get the consensus. And having sat in on a number of -- HL7 and X12 and with CAQH and seeing how difficult it is (mic fixed) for each of you to think about it and for Gwen for you to answer, do you have a strategy for really increasing the number of people that are at the table consistently and getting the votes that feel like you really are getting representations we have moved forward and it is the same issue that all of the standards organizations struggle with because of their resource constraints and I just wonder if you have a strategy. I will ask the same for everybody.
MS. LOHSE: Absolutely. We like to call it styling for dollars. One of the strategies absolutely is to make the process and the documents the most accessible. We have to use technology better than we have in the past. People have constrained budgets. They can't travel as much. How do we make sure we use technology in a very thoughtful way? And I do think we can take some lessons learned from other industries. We just have not embraced them enough. We had a lot of lessons learned from NACHA to do everything online, do things like conference calls, and make sure that you are available. If certain entities cannot attend the calls at the time, you need to have staff that can walk through all the materials at another time and that means resources. You have to have the resources for the acceptability.
Additionally, I would say that moving forward that outreach and coordination with things like the rec centers and the HIEs. The more we are able to show for administrative simplification that it is aligned with some of the clinical work and the more we are able to work with that alignment you are going to have more people at the table because they are going to see the effort that is put into align resources and it is more relevant to them, but I think that plays a big part in it as well.
DR. WARREN: Sorry I misspoke. Walter has the last word.
DR. SUAREZ: It is a two-part question, but it is a very quick one. This is about in your slide eight you talk about three major CORE operating rules, parts, components for eligibility and claims status. The first one is a set of infrastructure. The second one is the eligibility content and third is claims status content. The two-part question is are there interdependencies between the three or at least between, for example, eligibility content and infrastructure that will require that operating rules within the infrastructure be part of the eligibility. That is the first question.
The way one would think or maybe this is a wrong perspective is we have the standard. We have the implementation specification -- 750-page 837 or concrete document that has that. The operating rules one would expect there is a book, a document that has this as the operating rules for eligibility. As part of that book do you see infrastructure element in it, eligibility content elements in it or do you see just the eligibility part be the operating rule itself and it has no interdependency with some of the other? That is the first question and maybe you can address that.
And then the second one is in your slide you have a little marker that a simulated case rule requiring data content that is not mandated by federal regulations. My question is in the operating rules do you require data content that is above and beyond the standard?
MS. LOHSE: I will answer the second question first. Yes.
DR. SUAREZ: You do.
MS. LOHSE: We do absolutely, both with the eligibility transaction and also with the claims status transaction. Yes. Those additional data elements were driven by research to get to reducing the cost and clean efficiency obviously supporting the standards to do that.
The second question with interdependencies we have viewed this as there is interdependencies everywhere. There is interdependencies among the data content and the infrastructure and that goes to a technical level, but also when entities implement HIT they are implementing that across their systems which are all interdependent. Then we also look at it as there are interdependencies in the full revenue cycles, and you cannot look at one transaction whether it is the data content or the infrastructure, and not consider the bigger picture within the revenue cycle.
And then additionally, there are interdependencies within the industry. With the health plans, the clearinghouse is in the providers. The CORE rules have been packages of rules that include 11 rules or 12 rules or 13 rules. All of the interdependencies between the data content and the infrastructure are essential. There are things in the connectivity that have to align with the eligibility content and then also addressing the interdependencies among the entities that are exchanging data. There is a role for the health plans. There is a role for the clearinghouses and the providers.
If we don't acknowledge the interdependencies, I think it is going to be very hard for us to move forward. It is a great question, Walter.
DR. WARREN: Thank you very much, Gwen. Our next presenters are from Linxus. Did I say that right? Linxus. You confuse me when you have syllable in the middle here. We have Richard Donoghue and Eric Wallace. Thank you.
MR. DONOGHUE: Good morning. My name is Richard Donoghue. I am the senior vice president for strategy and planning at NYU Langone Medical Center and with me here today is Eric Wallace the executive director of Linxus. This is my role at NYU. I am the current chair of the board of Linxus. There has been a lot of terrific conversations this morning and presentations about why we are all here today and the importance of this subject most of which we also kind of covered in our written materials so I -- to repeat those items.
I think what I would like to do this morning as my component of this is bring you through a little bit of how one system evolves and I think it goes a little bit to answer the question that Lorraine just asked about how do you get real ownership of moving this from the people who are in the parties that are very much involved and need to really be driving this change. I will go through a little bit of that and -- to Eric who will -- some information on lessons learned as well as our view about this could evolve in the next couple of phases.
Just to give you a little bit of background on Linxus and how it evolved in 2003. Of course the mandate for standardized transactions and code sets became effective and pretty quickly we were in that -- this really didn't help. As a matter of fact, it has created all kinds of problems for us.
There was a small group of us that got together: Montefiore Medical Center, NYU Langone, Empire Blue Cross and Greater New York. The people who got together were senior executives from those organizations. It was the chief financial officer from Montefiore, myself from NYU and the chief operating officer of Empire. And we got together because we were so dissatisfied about the HIPAA transaction sets really created more of a problem than they did anything else because now we had communication going through electronically that created no information really and we had to make even more phone calls to try to figure what was going on.
We got together as a little bit of a pilot and we essentially grabbed up our billing operations and our IT operations and put them in a room. They all believed that the other side had just created this problem just to satisfy their own business imperatives and we brought them in the room. We forced them to talk to one another and they come out of the room and said holy cow. They think this is as bad as we think it is. Maybe there is a way we can work to fix this. We began to work hard through examples of issues on how we could really implement what HIPAA was trying to achieve. It was not an easy process. It was very detailed. It was hard work and we actually made some progress.
Your sort of founding principles, as we started getting into this. It was all about consensus. It was about mutual value. It had to be valuable for both sides of this transaction. The imperative was driven, not relationship driven. Reach specificity, interoperability, openness, accountability and clear roles and responsibilities. That was the way in which we approach this.
The piece that is missing up here -- in 2005 we hired Eric Wallace because we knew we needed someone to really start driving this force that we were trying to do this kind of from a committee perspective and work with our teams, but we really needed someone to help our people and work through the day-to-day issues to go some with what Gwen just specified. You really need people on ground. This is their job to help drive the change.
In 2006 the three entities that were involved -- the results with that, Brennan, other members of our community, health plans as well as the medical centers in New York and said this is what we achieved as a small group. Let's see if it can be something that can move at a higher scale and we began the process of seeing about ruling out what NYU and Montefiore and Empire had done.
In this transaction, the original set of transactions, NYU played the role of the hospitals. Empire played the role of the plan and Montefiore had very large position component and that was kind of how we brought Montefiore in and their role was to play their doctor element of this and that is how we brought it forward and then brought it back to our entities.
In 2007, we spent some time with the other members that you see there in 2006. We unanimously agreed that we needed to create this as a separate legal entity, that this was a really good idea and it needed to have more formal structure to it so we created a non-profit organization, Linxus. It is pretty much controlled, 50 percent by the plans and the providers. Its budget is funded 50 percent by the plans and the providers. Interestingly we didn't make it so cheap. The hospital's fees were $40,000 a piece and the plan fees were $60,000. This is just to make sure that the annual effort involved is significant and focused and everybody has paid their dues consistently and we have done some really good work I think as a result of that.
With that you see the here the implementation specifications: version 1, version 2, and version 3. We tried to take this imaginable function. We haven't provided you with all the details with that and certainly we can do that and I think it is posted on our website. If you want to go through those, we can certainly do it.
We have gone through a process of each year, the groups getting together. We meet quarterly as a board. There is very strong participation from the senior executives from each of those medical centers as well as senior leadership from each of the plans, but yet a detail of what we do is make sure that our staff and patient financial service and IT are working very hard and closely on the different work groups. We have an enterprise that has the ownership of the leaders of those organizations and then we have the work groups that have significant people with technical expertise who engage on a regular basis to make progress on the things we need to do.
When we look at the imperative here -- what we even found those with that kind of leadership involvement is -- because this is a voluntary effort we have slippage at times. Our tension spans are pulled in so many different ways that what we have really concluded is it needs to be strong, regulatory mandates for the way in which these things have to evolve and then the organizations will jump all over it.
We really believe that there is substantial value here, substantial value. I think that what we can do is probably skip through, Eric, to some of the other pieces of this.
Number one, we feel that there really needs to be a level playing field of the business priorities of all the parties need to be equally considered. When I think about all the priorities, with all due respect to the IT vendors that are out there, I think they are a very important component of all this, but the parties involved here are the payers and the providers. We are the ones that have the mandate to fix this. The vendors are supporting actors and really important ones, but at the end of the day the leading players here are the providers and the plans. We need to be equally involved in figuring this problem out and taking ownership of it.
We think there needs to be an imperative for the industry. On health reform -- actually this is kind of -- we are all kind of familiar with some of these numbers at this point, but the Medicare cuts, the $597 billion.
Interestingly, we believe that on the plan and provider side, that kind of money in administrative simplification, but it is not coming from the government. That money is coming from the plans and the providers and it can come if we simplify the administrative component of the way we operate. But the governmental plans there is a really good way in which we communicate now with Medicare and Medicaid, but we don't communicate very well between the health plans and the providers. That is what we think this is really all about, but we need the government to create the rule set for the way in which the plans and the providers get together.
I think we have here some numbers. Again, I think that is kind of repetitive for what I have just gone through. What I would like to do is turn it over to Eric on some of our lessons learned and the way in which we think we can go forward.
MR. WALLACE: Great. Thanks, Rick. Again, I am Eric Wallace, the executive director of Linxus. As Rick just outlined, obviously a lot of the problems that have I think brought us to this room today -- we had a chance to actually meet with the Congress and talk through legislative language for administrative simplification because I think a lot of the common themes and issues that we are experiencing I think are consistent with what a lot of panelists will be talking about today. As we think about what some of the lessons are that we have learned and how do we go about constructing a way to resolve those problems, I think all of these are critical points to consider and at the end of the day we are trying to bring this back to a cohesive and a structured process whereas Rick said we have equal participation of the trading partners who are really responsible for driving down the costs and that is the payers and the providers.
Let me just talk about in terms of regulations because I think Rick hit on this very clearly that we can't do this voluntary as an industry. Regulations are absolutely essential to making this work. We have tried to do this on a voluntary basis. We have had now standards on the current version. They are now 12 years old. It is an entirely too long of a maintenance cycle to try to move this on a purely voluntary basis by moving to new versions of standards. What the regulations provide is they provide an ability to have a routine and predictable maintenance cycle and we must have a routine and predictable maintenance cycle that aligns all the interested parties.
Basically efforts of Linxus have been trying to identify where those gaps are in the current standards which if you go back to the previous slide, you will note that there was an implementation guide that we are currently working with 4010 that was produced in the year 2000 which incorporates really the business knowledge of the late 1990s. We have evolved considerably since the late 1990s and we really need regulation to help move us as an industry to the next version with industry input. We can't wait for industry adoption to happen on a purely voluntary basis.
We would suggest even though HIPAA originally called for annual reviews that we go to at a minimum every two-year review cycles which says basically the industry has to come forward to say what are the issues with standards, what potential operating rules are necessary, and what do we need to do in order to fix problems and then regulate the implementation across the entire industry. I think that will really get to the disconnect that I think we are all experiencing between standards and the business needs that are necessary.
I think there are a lot of advantages to actually moving to the more routine and predictable cycle. Number one, the business users as Rick said the folks are in the patient financial services areas, the folks in the revenue cycle who are dealing with the phone calls to the payers and having significant issues with interacting electronically can come forward actually and begin to incorporate their feedback into national mandates as opposed to having to wait every 12 years for the new standards to come in. I hope that we get an update that fixes those problems instead if we had a predictable cycle we could come forward and bring those issues and make sure that they are getting incorporated. I think you would see a lot more participation.
The implementers of the technology of the vendors, the folks who are doing internal work I think also would be able to better manage resource if there was a predictable schedule where I could actually look into a two-year advanced window and say I know what my implementation requirements are going to be and I can actually begin to resource accordingly around what the technical requirements are rather than essentially having to do some guess work around when the regulations might actually gain some speed.
The regulators obviously want to have a better understanding of where the industry is and have some sense of scale of what the industry can actually accomplish and if you have a two-year cycle, you can actually begin to scale around what can be done in a two-year window as opposed to a last minute rush to try to get everything in because of a concern about having to wait a long time for the next regulatory cycle. That would greatly improve the oversight function for the regulator.
And obviously the standards developers who are trying their best to try to incorporate for the industry into their implementation guides set timetables will give them the ability to actually prioritize their work, move things into current versions of implementation guides that can be adopted to regulation or defer to the next version of a guide so that we have some ability to actually prioritize those things, but not necessarily go back to the industry to say we are not going to incorporate that because we have to get the regulations out. Rather we could say we are going to include it in this version but we are going to wait for a change in particular that you have a concern with to the next version. It is only two years out so you don't have to wait a long time for that.
I think the idea of an annual cycle is probably pretty aggressive, but a two-year cycle I think that is pretty reasonable and it gives people an opportunity to actually experience from the implementation perspective where the issues are, where the problems are and then begin to incorporate that into next versions.
The other part of -- once we have these mandates they have to be balanced and they have to have technical experts and they have to have business users not just the technical experts driving the business mandate, but both groups together really making sure that that happens.
And then it has to have, as Rick said before, equal direction from business users from the payer and the provider as well. Both are interested parties and have to be at the table.
The certification function is the next thing I would like to touch on which was raised earlier and we have to have a process that works better than what we have today and obviously audits are going to be very helpful. The complaint process has not worked and really there is no organization today that is out there that is capable of operating rule and standard certification. And the most important part is that you have to have a group that is going to be equally controlled from the payer and the provider perspective looking at certification because we have to have that feedback loop to go back into standards of development. You can't have certification identifying problems that then can't be fixed. You have to be able to take that level of certification because it is going to surface issues and when it surfaces those issues it has to go back into the standards and operating rules development process.
I think we have talked about this that the idea of having funding and governance really over the process and that is absolutely essential particularly the funding to make sure you have the folks who can align the work that is being done with the policy goals and really making sure it is their full-time job.
I want to touch on our recommendations. Our recommendations are both a short term and a long term. I am going to show you a couple of pictures and you have some questions around those, but basically we want to talk about long-term solution around standards and operating rules because we have viewed this as a single process. Any goal of this is to be able to make the standards work better. We have to be able to have a business imperative and we have to be able to have a good open process for development of technical specifications.
What I want to talk about today is a proposal. This is a picture and this is for purposes of further discussion and actually what we would like to do is propose that we actually have this longer term discussion as a committee in another hearing. What we want to be able to do out of this is have meaningful standards and operating rules consistent with what is in statute and we believe this particular model says there is a guideline for how we do regulations going forward.
What we see is on the left hand side what we are calling just for purposes of this discussion is steering committee and that is to represent the business imperative and that would help set the policy direction for standards and operating rules and I think get the right people to the table. The question was asked how do we get the people to the table and you have to have a group of the committed stakeholders, the ones who are going to be responsible for reducing costs, bringing the right people from within the organizations to the table and making sure they have a voice. We think this is an essential part of standards development and operating rules development. It has to be equally directed by the payers and the providers so that any version of standards or operating rules that get proposed for mandatory national adoption won't just clear standards experts, but also have clear input from the business users.
We actually shared this conceptual model with AHIP and AHA. We are planning to meet and discuss with the AMA as well and we actually would like to request some more time for these discussions to see if we can reach consensus in setting up this entity so it has a national footprint beginning on day one and represent health plan, hospital and physician business imperatives.
We have also approached CAQH CORE because we think we collectively have a considerable amount of expertise and knowledge around the business imperatives and I think collectively we would be able to add tremendous value to the SDO work products.
In this model SDO work does continue as it does because it is public. It is open. It would have the added responsibility, however, of creating operating technical documents and instructions in addition to the implementation guides for standards. We are strongly recommending that the standards and operating will document creation be managed under the same DSMO umbrella so the energy creating operating rules are following the same procedures in accordance with the American National Standards Institute or ANSI.
The operating rule technical documents should be subject to the same disciplined procedures that are already required for standards, technical documents, and instructions and that the current SDOs are already set to accommodate through ANSI if the ANSI process if they follow. And finally on the left hand side as you will see the certification function falls under the business imperative group.
The model is -- it is again a work in progress. It requires substantive conversations between the various parties who are contributed to date and we have begun talking to several groups as I have said about getting this up and running, but we do recognize that we have to meet a short-term objective being able to get claims status and eligibility operating rules developed when we talk about the short term.
This is a model that we are proposing for the short term so that we can ultimately get to the longer term vision of bringing these parties together. What we are going to propose essentially for this interim process is that the SDOs, X12 and NCPDP for example, are the only entities that publish the operating rules for technical documents in instructions for claims and eligibility. The SDOs are the technical subject matter expertise for eligibility and claims status transactions and they are experiencing publishing consensus, technical documents already.
The SDOs must agree to in turn for this publish file documents for the DSMO to present recommendations for final regulation that have to be issued by July of 2011 and refer to recommending the SDO's file identical procedures required for ANSI-accredited status in developing operating rules and for the operating rule technical documents.
Furthermore, we are to insure that the business imperative for providers and health plans incorporated into SDO technical documents we are recommending that all groups like Linxus, CORE and any other entity that believes this created operating rules that they would all independently submit the recommendation request to the DMSO. In fact Linxus has already done this. We have submitted our recommendations and our requests to the DMSO and we are going to work through the DSMO to triage these recommendations and requests to the appropriate SDOs and we recognize that some of our recommendations and requests will not be operating rules. In fact many of them may be considered updates that need to go into the next version of standards after we have implemented 5010.
The decision by the SDOs either create an operating rule specification or updates standard specifications is the critical role the SDOs will provide under our interim proposal.
The legislation clearly states that standards or implementations that an operating rule is distinct in that the operating rules are guidelines that are not defined by standards or its implementation specification. Charging the SDO to differentiate that our requested operating rules specification is either standard update or an operating rule avoid the risk of duplication of effort or conflicting requirements. If an entity does less expert and standards charge creating operating rule effect specifications on a parallel path, we run that risk.
Finally, the SDOs have the responsible entity for creating eligibility and claims status operating rules. It centralizes. It streamlines decision making so there is less risk in meeting that July deadline. If we have multiple entities coming forward with recommendations and then the committee having to choose between them, I think that may add some more time to actually getting the consensus.
I think that the work that all of us have done in trying to come with ways to fix the problems around administrative simplification will be incredibly important and informative to the process of updating standards and creating operating rules.
We do recognize that our recommendations would have certain limitations and that we have had predominantly providers at the table who represent large urban academic medical centers, but we think the process that we went through is incredibly valuable. We got through a level of specificity and granularity that I think is very informative to this overall process and we are confident in submitting our recommendations through the DSMO and through the SDO is to have the creation of operating rules happen in that forum because of the open nature of that type of a forum.
The final reason I think that this interim process was well is it is really a test case to give us an opportunity to take a look at what is working through the current process of developing not just the implementation guides, again, on that more regular cycle, but also the operating rules documents through the SDOs and be able to react to that to be able to come back to this committee as we look at the longer range plan as we presented earlier plus the additional transactions that we know we are going to have to incorporate.
For that I think we are happy to answer any questions. We very much appreciate the opportunity to talk with you. Thanks.
DR. WARREN: Just to let everybody know after we have the questions, we are going to take a 15-minute break before we hear the last presentation. Questions? I know Walter has his hand up.
DR. SUAREZ: I will start.
DR. WARREN: No.
DR. FITZMAURICE: I will be quick. Let me ask. Is the Linxus process a consensus-based process? I am interested, both between interested and concern, about the breadth of the representation at Linxus, that is, the national representation with what you have to offer.
MR. WALLACE: Sure. I will first take a cut at it and then I will let Rick jump in. I think, again, as Rick outlined earlier the way Linxus formed, it was in response to the inadequacy of the national standards. Our input process was through the committed volunteer effort of organizations that noted the delinquency of standards and wanted to actively work on improving it. We have the challenge of playing in organizations that want to take an active part in that voluntary process. Ultimately the lessons that we have learned we believe have to go through an accredited process of consensus developed.
It is why we have very closely been working with green recommendations that we have come up with to X12, to the SDOs in order to basically take what we have still tested and bring it into the larger national process. We know again the constituency that we pulled together doesn't meet the requirements of an open consensus process as is defined by ANSI and other accredited standards organizations. We think we have become very much a theater to that because we represent the business imperative. It is important to have that business imperative perspective and have a broad perspective and one of the things that Rick mentioned when we incorporated was to bring an open process for providers and payers across the country to join who have an interest in driving that business imperative and the goal was to be able to have anyone who is interested in participating in that capacity help to inform the standards development process.
We think that you have to have people at the table. You have to have the right level of people at the table and then you have to have an open standards development community of forum to be able to drive that in an open and transparent way.
MR. DONOGHUE: If I could just add a little bit to that. There is no question that the group that we have put together at Linxus is very regionally focused; however, I can tell you that for NYU our patient base includes people who are principally covered by national plans and national products. There aren't too many companies that have their headquarters in New York, but everybody has representation there. The plans are developed on a national place somewhere and the patient base knows it is taken care of on a local plus the fact that we have patients coming from New Jersey and Connecticut.
We appreciated right from the start that having a new work based activity was woefully inadequate. However, having said that we thought that were some things that we could do to work on. What they are looking for and I think what Eric is suggesting and what we would like to do is engage in a conversation that brings players and representation from a national base. I guess in my dream it would be the national hospital organization would appoint some critical people and the national AMA would appoint some critical people and AHIP would appoint some critical people and we have the key representations that would be there who would really take on the role of the activity that Linxus did in New York. That is what I would like to see happen.
DR. SUAREZ: Thank you also for the testimony. It was very helpful. Just a couple of questions. One is above the implementation specifications that Linxus has put together are what you would consider standardized companion guides through the implementation specifications? Ultimately the implementation specifications that are in statute or in regulations are the implementation value for the transactions. You have mentioned in version three of the implementation specification for eligibility claim status, remittance transactions. Are those companion guides for your perspective?
MR. WALLACE: Yes, I think there has been no question about companion documents that you are asking. I think the implementation of companion documents by the industry has been very -- it has been non-standard as well, a lot of different interpretations about what a companion document does and what kind of instruction it should provide. One of the outgrowths of a lot of detail in those companion documents have been because of the amount of variability and flexibility in the base implementation specifications or guides that have been published.
As I have begun to talk a little bit more to the standards organizations and understand what happened in 2000, there was a very sensitive and analytical view about what standards should do from the beginning which was provide maximum flexibility with the trade off that that flexibility would reduce over time.
One way to reduce that flexibility that health plans could communicate if they felt that their flexibility was too great on the implementation guides and they want to give specific implementation instruction how they handled that situation rule. They would try to imbed that in a companion document and try to provide some clarity around standardization that they had taken in their interpretation of the guides and while that is helpful each plan did that on their own and that is the non-standard standard that was identified earlier by Lorraine and I think ultimately we want to be able to get to it. As I said it is not a 12-year cycle where the plans are independently making these judgments about where the implementation guides and the standards have flexibility that is creating confusion and lack of good work process with the providers to reduce costs to actually have that imbedded out of companion documents into the implementation guides or standards.
I think that really is a consensus-based process that has to unfold with the right people at the table so that we are working on the things that really do drive the costs and you can't necessarily have just technical folks trying to assume what the business imperative is and you can't just have the business folks driving the technical work product. They have to be really working in harmony with one another and that is where that I would say that move away from companion documents which try to account for or limit variability where that role comes into place. We are not talking about documents anymore. We are really talking about process and the process to be able to get to consensus and greater standardization.
DR. SUAREZ: Your implementation specifications include what?
MR. WALLACE: So our specs are dealing with content because content -- I will give you an example for 5010 for the eligibility transaction. The eligibility transaction says in 5010 different than 4010 you have to give a primary care physician in the eligibility response. For patients that have to have a selected PCP provide that information. And it is not specific in terms of what data elements have to be included that are useful to a receiver to say what do I need to know about this PCP in order to drive further transactions or be able to drive a referral, et cetera.
We want to answer that level of specificity to say if you want to return PCP and here is the structural of the transaction where certain fields can be returned, you must return these pieces of information that are valuable to the provider to understand what you need to know about that PCP there and -- number there, their phone number. We wanted exercise of trying to figure out what does the provider really need, what does the health plan actually have within their core systems that they can provide and come up with negotiation of what can actually be accomplished.
Ultimately review what is in that document and that specification that we came up as a future version of the standard. That should go into the implementation guide for consensus process of everyone at the table because we think we have come up with a definition. It may not work for everyone. It may not be achievable in the next version of the standard, but it should be on the table.
And that level of variability or openness in what can be included down to the detailed level is really critical because otherwise if I am just getting a wide range of responses from my plans in terms of PCP then I have to build a different process to each plan on what information to give about PCP and what that means. I am going to pick up the phone and call. I am not going to rely on the electronic transaction.
DR. SUAREZ: Thanks.
MS. TRUDEL: So obviously LINXUS started quite a while ago with a very specific need and at some point in time did you give any consideration to saying this is pretty consistent with what the CORE folks are doing? We are just going to move over there and if you thought about that and decided why not.
MR. DONOGHUE: We engaged in a conversation last July. We contacted AHAP and CORE to begin the conversation because we thought as the deliberations were taking place with regard to legislation of national health reform. It is a really pretty good idea if plans and providers actually got their act together. I think CORE had been involved in the conversations already which were doing terrific work and there was lots of other activity and unfortunately those conversations didn't really get a chance to take off as the process last year was -- the process was what it was.
We have as we have been coming closer and closer to this we have -- we have reached down and tried to have some conversations. I believe that those things could evolve in a good way, but I think it requires a blending of the views. I think one of the reasons why we are here today is we do believe that that is where this should go and we would like you all to create a framework in which those conversations could take place.
DR. WARREN: Any other questions?
MS. DOO: Thank you. The same question that I had asked to Gwen earlier. For you all I knew a meeting with your constituents, plans and the providers. What did you do or what would you suggest we do as we move forward of getting more people to the table participating in both the development and the actual voting so we feel like the Federal Government is adopting something that for thousands of organizations and millions of dollars that really is representative. What are your recommendations?
MR. DONOGHUE: I will start and then Eric can jump on that. I think what we were able to do in New York which was at the time was very helpful is that we were able to bring together a group of leaders within the organizations that became part of Linxus with a vision about how we could actually influence the way that communications work and create value. Now what I think what we are looking for here is for the same type of thing to happen at a national level and that very senior leaders become part of the governance of the organization that Karen just -- again, in my vision of this I would like to see an organization that is a non-profit organization governed by senior executives from the plans, the doctors, the other providers and the hospitals. And that those people are with a charge to say you as an entity are going to really help shape the way the administrative simplification takes place in this country and that there is enormous value there. That is a huge charge, but I believe that is one that is actually capable of being achieved.
It will only be achieved if you have that kind of gravitas, if you will, sitting there leading it and then directing the technical aspects of how it actually takes place in the field because the work groups -- people like me are useless in a work group, but we can bring together the technical expertise within our organizations to make all these work groups really effective and give them guidelines and debate with our peers what are about the things we should be focused on.
MR. WALLACE: In adding to that I think that is absolutely a hundred percent correct. In order to get people to our table it was Rick and his ability to bring the right stakeholders within his organization to the work groups and frankly hold them accountable for the work products that are being developed. It is absolutely essential.
I think we have heard in going back to problems that we have been hearing about that we haven't had enough provider participation in the work groups going on at the national level and there are some real reasons for that. Even within New York we have a broad range of providers who have different levels of technical expertise because either they are going to be entirely developing technology in house. They have an IT staff and they have built in all the IT capability within their organizations or they fully outsource. They have the full range even just in this New York membership where the IT function is completely function as completely outsourced to a vendor and the other end of the spectrum where the providers doing all the IT development on their own and the question becomes from the provider's perspective in being able to help set a direction where do you send your people and if I don't have the internal technical expertise as a provider to go to a standards development type of an entity that is predominantly engaged in technical speak, is my voice really being heard and that is the issue.
There needs to be a place for those entities that regardless of how they have decided to build their IT function whether it is doing it all internally or whether they have outsourced to a vendor that those providers can have a seat at the table and provide the direction and that is really what it came down the decision that we made with Linxus was a board of the governance of the decision making has to come from the payer and provider discussion, and then as the folks who are responsible for their entities they have to bring their people to the right technical work group discussions or in this case as we are talking about to the right discussions for the operating rules and the standards development at the national level and get them to participate there, but if they are not at the table and if they are not helping set the direction and this conversation is being driven by folks who are mainly technical, the provider isn't having a direct voice. There needs to be a direct voice to the provider.
MR. DONOGHUE: If I can add one more piece about why I think the providers haven't been here, I think to a large degree each of the provider national organizations have had different sets of priorities as the conversations got engaged in. When we tried to reach out to the Healthcare Financial Management Association and American Hospital Association and others, at times their legislative agenda was very, very different than this piece even greater New York. I feel I was chairman of Linxus during this process and I couldn't really get greater New York legislative agenda to kind of focus in on some of the things that I would like to have done on this aspect of it.
At times I think people just -- it is so hard. The work in front of you all is so hard that people kind of says somebody has to work on that. Everybody agrees somebody has to work on that, but they just don't see how they can participate. I really do think they have the chance of creating something that can do that.
DR. WARREN: Let me ask one question and then Justine. What kind of hit made with your presentation that I thought I should probably also ask Gwen the same thing is that all of you are dealing with people that are in large metropolitan areas. How are you going to engage the rural folks that are in this which comprise the majority of the United States even upstate New York which is incredibly rural?
MR. DONOGHUE: Absolutely right.
DR. WARREN: How do you see a responsibility and Gwen needs to answer too after Richard and Eric do.
MR. DONOGHUE: I do believe that when you push the appointment of individuals to the entity that I was describing. We have great examples of people from all elements of our industry who participate on national committees and national bodies and representing a kind of constituency that you are talking about. I do believe you can get their voice into that governance function. I think it is very hard for them on a technical basis. They can influence. They can send input though. I would say to a large degree that is a group of entities, the rural hospitals that are going to rely upon vendors. They are going to rely substantially on vendors to give them a platform that works well.
I believe that one of the things that certification needs to do is go beyond just the certification of the plans. It really needs to go to certification of the providers which in this case is probably the vendors. If we move towards that place, get leadership from rural at the table or the governance function, but really drive through the vendors who are the ones providing this kind of technical expertise up for them. NYU has a set of resources or Montefiore thank you from I think later on today in our IT shops that are really quite extraordinary, but even then we rely upon lots of vendors. We definitely need to be making sure that those parties are involved.
DR. WARREN: Do you want to add anything, Eric? Okay, Gwen.
MS. LOHSE: I guess I look at three examples that I can think of at the top of my head. Ohio, Texas and Colorado all had draft legislations about administrative simplifications. We know this is not a unique conversation we are having. It is an important one, but it is a national issue that is happening at a regional basis across the country.
I think as we think about reaching out on a rural area, we really need to think tactically A how to bring the leadership to the table, but B also make use of the regional channels and distribution channels that exist. In Ohio, for instance, they have a hospital association that was very involved in the national debate or the state's debate on creating state-based legislation.
Colorado obviously has a significant rural population and when we traveled out there four or five times about this topic and they actually are about to pass some legislation, they have thought of a number of tools they can use to get out into the rural areas and I think Rick is right. There is absolutely a critical role that the vendors play, but then also whether and this happened in Texas as well and I was down there speaking with them several times about two years ago. The national association for the providers has some great state networks whether it is the AMA, whether it is the AHA, the AAFP, the MGMA, and the AFMA. We have a whole list. We need to really take advantage of those distribution channels that happen on the state level to reach out to the rural.
Additionally I would say the rec centers -- they are going to be dealing with the same challenge and how do we -- I know that right now meaningful use is very clinically focused. I think that ONC made it clear as they move forward to the next stages of meaningful use, there will be administrative focus in there. We should be taking advantage of those rec centers and how do we work with them and learn from what they are doing to reach out to the rural populations. We need to share lessons learned so we don't reinvent the wheel. There is going to be some value that comes out that process and we need to work with it.
Finally, I would also say the Medicaid has a lot of challenges to reach out to their folks because of the resources, a whole set of constraints, and I think we have some lessons there that we can apply in the rural area as well. It is a great question and it is going to have to happen through collaboration.
DR. WARREN: Since Kansas has 50 critical access hospitals which means 25 beds or less, it is one of the big challenges we have --
MS. LOHSE: Absolutely and if you do want the contacts from Colorado, they spend a lot of time on a state level. We would be happy to share that.
DR. CARR: This goes back a little bit to the earlier discussion about two groups working together. Is Montefiore part of both groups?
MS. LOHSE: Montefiore is of course certified and they have been fantastic participants. You will see in the Phase I ROI study we did for CORE their CFO is quoted and they really have been great.
MR. DONOGHUE: I think from our perspective we think CORE has done a lot of really good things. We think Linxus had done a lot of really good things. We approach things in different ways. I do believe that we have been working within the framework that was there which was very limited and as we think about the future we can see a way in which we have a truly integrated set of activities where again I kind of harp on the governance aspect of this, but I believe organizations are principally driven by the top. CORE is not a separate 501c3. It is a committee of CAQH. Which is principally governed by plans and I think that that needs to evolve in a way that is similar to the way Linxus evolved.
DR. CARR: Just to clarify. For Montefiore to be a part of both was it because one provided something that the other didn't provide?
MR. DONOGHUE: Absolutely, and Montefiore was part of CORE on the work groups not the governance.
MR. WALLACE: Just to take on what I said earlier which is you have entities that are doing tremendous amount of internal development of IT and others that depend highly on their vendors. Montefiore is an example of an entity that does a tremendous amount of their own internal development of IT. They are participating in many groups. In fact, there is going to be a representative from Montefiore testifying later as part of the reactor panel. They will be talking a little bit more about that.
I think when you have an entity like Montefiore with a very large internal IT staff given the problems that have existed with existing standards I think what they are reacting to and participating in many different efforts is to show good faith that they are trying move the process in the right direction and move things in a way that solves the problems without being entity specific, but at the end of the day we want to be able to have providers at the table as Rick said. The governance is essential to make sure that not just the providers carry the process or just the health plans carry the process, but that there is a true consensus between the two groups in terms of what carries the day on the prioritization.
DR. WARREN: Any other questions? Okay. It is break time. I have 10:32 on the screen. If we could come back about 10:45.
(Break)
DR. WARREN: We are going to continue testimony and we are going to be hearing from NCPDP, first with Lynne Gilbertson followed by Margaret Weiker from X12. Whenever you two are ready.
MS. GILBERTSON: Good morning. As Judy said I am Lynne Gilbertson with the National Council for Prescription Drug Programs. We are an entity accredited standards development organization that services the pharmacy industry. We bring together entities from all the different sectors involved in pharmacy not only the pharmacies, but their vendors, the clearinghouses, the switches, the health plans, the payers, key prescribing software vendors, key prescribing systems. You name it. We try to bring together in consensus building. Sometimes a little bit of varied discussion but that is what consensus is all about and come together for standards for the sectors of the industry.
Some of our standards for the purposes of today's discussion have been named in HIPAA and our discussion today is on operating rules. This is the definition as it came out of the regulations. The points we want to make on this piece is that the rules recognize that business rules and guidelines may already be present in the implementation specifications. There may be needs already met.
Operating rules may cover exchange not already defined in the implementation specification. They are recognized that the SDOs govern the data content of the transmissions and the business rules and reference documents that require support of all that. And then operating rules cannot add, modify, or remove requirements defined in the specs.
Some of the recommendations we are putting forth is that operating rules entities must conform to the ANSI essentials. We have discussed already this morning. It must be open consideration. It must be balanced, consensus. There must be public review processes, appeals. All those standard practices are just the right thing to do.
If there are multiple entities names, that is just fine. There should be consideration on the collaboration of the artifacts and the processes and the collaboration of actions when those requests come forward as part of the regulatory process to the DSMO.
The collaboration must be two way: the SDOs and the operating rules entities. They go hand in hand when appropriate. There would be new versions of existing documents that must be updated and kept in sync, new transactions and business cases that come forward whether they are in HIPAA or not and there could be new methods of exchanges.
Later this afternoon we will hear from the DSMO. NCPDP strongly supports the recommendations the DSMO will be making.
The operating rules recommendations. We are also suggesting that the publication of the documents be in sync to the best that they can be and that they will have to be in lock step as appropriate with the standards themselves. There also may be considerations where the operating rules will address problems that are outside the standards. They are just giving more guidance that is going to be between the versions of the standards. There has to be fluidity in allowing those documents to come forward as appropriate.
The recommendation is also that when operating rules come forward they must use the existing processes. We are using today our submissions and to change requests to the DSMO. The DSMO then recommending versions of operating rules to NCVHS and NCVHS recommending rules to the Secretary. We have done a lot of education especially in the NCPDP environment with making sure our participants know of this process, know what it means, what it doesn't mean and we would hate to introduce a whole new process for a separate set of documents.
NCPDP related to operating rules. In our participation in HITSP we were aware that there was some discussion at one of the technical committees of looking at adopting the -- recommending the CORE operating rules Phase I. The pharmacy industry had not been involved at all so we really didn't know what this was all about. We took a look at the operating rules that handled certification and exemptions, operating rules sections that had to do with batch and real time and connectivity and availability, and then there were sections on X12 270/271.
We somehow got together. I don't even remember how but outreach with CORE to say we are interested. We don't know much about this. What is it all about? It was recommended that we look at the Phase II operating rules instead of the Phase I.
We created a task group and actually over discussions with CORE representatives we build the NCPDP connectivity standard imp guide for the CAQH CORE rule. This was addressing the connectivity only, the ISO layer that is the interface with the user's application. It was recognized that the NCPDP guides already handled some of the other layers of the OSI.
What the task group did besides creating this document was also to look at some payload data elements that were addressed in the CORE document and build the data elements for use in the pharmacy industry. The document only handled the real-time transactions based on the Phase II scope and there were some recommendations that industry brought forward that CORE is looking at in their Phase III.
Of note it just is the reality of the situation. There was limited interest from the pharmacy industry in working with this mainly because they have lots of transactions already being exchanged today and don't really see a business needs to change them. While we provided based on the HITSP recommendations it did go forward. We provided this bridging the gap of what can be used if you are asked to be CORE certified, what does it mean, and then the data elements that could stay within the NCPDP standard environment so that as versions are updated of our standards, we can provide the necessary qualifiers that people need when they are exchanging the payload transmission area. That was the background of where we have been.
Related to the actual rules for what needs to come forward right now for the eligibility impact and timing. Prior to Medicare Part D you could count the number of eligibility transactions pharmacies on your fingers and toes. There wasn't any real need. You could do the real-time claim and get all the information you needed so why bother with eligibility verification.
With Medicare Part D the advent of a TrOOP facilitator, a true out-of-pocket facilitator entity was built to allow the obtaining of coordination of benefit ID information for beneficiaries in the Part D program. They appointed a facilitator and we used a specialized eligibility verification transaction to exchange that information. From RelayHealth 47 million of these transactions occurred last year. You can see it is very important and very specialized use of eligibility verification. We want to make sure that any operating rules that would come forward do not negatively impact all this business exchange.
We are also a little bit concerned with expectations of operating rules. The Telecom D.0 train has left the station. People are already getting ready to test the transactions for D.0. They are not going to welcome going back and trying to redo something if an operating rule introduces something new. I am not saying that the operating rules are, but we just have to be mindful of that.
The other use of the 270/271 subcommittee is very aware of is our favorite ePrescribing. And we use the 270/271 from the prescriber point of view to obtain the formulary and benefit IDs that they can use to check patients' eligibility of their formulary and benefit files. We want to make sure that any operating rules do not negatively impact this special use of the 270/271 as well.
As reach out and guidance we talked yesterday about the pharmacy ID card and in the ePrescribing environment there is a possibility, it may be remote, but there is still a possibility when the prescriber wants to prescribe a given medication, they do check the patient's pharmacy benefits. I have my pharmacy ID card with me. The medical environment is not very familiar with reading the pharmacy ID card. We have created a guidance document that helps vendors say if you happen to want to support in your system the ability for a prescriber system to take on a pharmacy ID card, here is where the identifiers are and here is where you put them in the 270 transaction so that you can use the transactions you are used to with a card you may not be used to.
Some of the information that Karen and Lorraine brought up this morning related to the situational requirements that are part of HR 3590. This is the actual rule that comes in to play. The bolded section four is what I am going to spend a little bit of time discussing dealing with apparent gaps or problems. We are a little concerned with what it is and what is supposed to be addressed and how it is going to be addressed.
We believe that NCPDP has met the criteria that are shown in section four. We recommend we be recognized as such. If we have not met these criteria, we seek clarification of what the problems are and what the statement was trying to resolve. It is very disconcerting to see in regulations something that we can't fix, we don't know about, we don't know what the intent was, and that is what the cyclical cycle of our meetings and the ability to submit change requests and all that is all about. If there is a problem, we would like to know about way before we found out in regulation. Some of this information is detailed in the letter which was sent to the subcommittee in June.
One of the sections that is described is about data elements being unambiguous. We believe we have the NCPDP data dictionary that gives you all the fields and their descriptions and all that stuff. The External Code List that tells you about the values and their descriptions. We don't support reason and remark codes, but we do work closely with one of our work groups and X12. If there is an overlap on something perhaps that happens in the NCPDP claim that then needs to be shown in the remittance advice that we get every single lined up correctly. There is that collaboration as well.
With the unambiguous we also recognize we have spent many years building the telecommunication D.0. Granted there are problems in the 5.1 world, but that is old history and we have moved on. But if there are problems, we would like to know what they are. We have spent a lot of time -- we, the collective industry because it is not me sitting on my high horse. It is volunteers who come in who want to solve the business problems. The insides contain rules, guidance, examples, situations or the transaction situations for the segments situations for the fields. We are not quite sure what unambiguous or additional conditions. We really seek some guidance on what this is all about.
We also have a freely available Version D Editorial document, which is updated quarterly and contains frequently asked questions, Medicare Part D needs that they put forth as guidance for us, questions, further clarifications, things like that that the industry has available for reference material for their use.
We also have spent time working with collaborative efforts. Some of you may be aware of -- Minnesota has been very active and working on guidance information in that state and collaborated to the point where there were no additional needs for regulatory requirements of the Telecom guide because they felt that the guide met the needs of the regulation as it stood.
We also published something called the Payer Template Imp Guide which is something that has been around since version 5.1. It is a guide that the payers and plans can pull down and use a standard template for exchanging the payer sheets we talked about yesterday to exchange their business rules, their routing information, things like that. Once again it is a standard mechanism for exchanging the very important information between the payers and plans and clearinghouses, vendors, providers, et cetera.
There are also criteria that the data elements be required or conditioned upon set values in either field. This statement is really disconcerting. It is not possible that every conditional data element can be dependent on other set value in another field. There are business rules. Business rules are not set on a value that is in another field.
On the next slide I provide some examples. I am not going to read through them, but one of the simplest ones that were explained to me is pregnancy indicator if patient is pregnant. What other data element defines patient is pregnant? You ask the patient. It is a business situation. It is not an element situation.
The last statement is prohibit additional conditions except where necessary to implement state or federal. We believe the Telecom Imp Guide has already met this. It clearly stated the situations must be followed. Additional conditions are not allowed. And where it is appropriate there is actual language that says required if necessary for state, federal regulatory requirements to recognize that we have situations where you just don't have a business case. You are being told to do it based on a regulation.
Finally NCPDP believes the requirements have been met. It is really important to recognize that the efforts of any documentation that are created by the industry are created by volunteers. We are concerned that if there are gaps and errors or something that caused some of these statements to be put in the regulation before we engage the volunteers, we need to know what it is we are trying to fix. We seek guidance on that as well.
Based on the pharmacy industry, the Telecom implementation guide, our Version D Editorial I mentioned, our payer template and other reference documents that NCPDP members create and provide to the industry. NCPDP formally requests to be named as an operating rule entity fulfilling the criteria established in this regulation. We are not for profit 501c3. We have been developing standards based on business requirements for over 30 years. We are the ANSI accredited organization and have shown our collaboration with other organizations over the years. We participate in the DSMO. We are publishing industry operating rules based on collaboration with CORE. In addition our documents and implementation guides are available for public review as part of our ANSI accreditations.
The NCPDP bylaws and standing operating procedures support our becoming this entity. And NCPDP work group supports task groups which are open to any interested party whether you are an NCPDP member or not and much of our work is done via these task groups which are held via conference calls. A project team event at NCPDP will be created to add any new functionality to the NCPDP environment to handle the operating rules entities.
Collaboration is very important to us. If multiple organizations are named as operating rules entities, NCPDP fully intends to collaborate with these organizations. We recognize the need for consistency of process. Our artifact publication and coordination of recommendations for the operating rules and the standards as we go forward, in versions and regulations. This recommendation is forwarded with the commitment of NCPDP leadership. Thank you.
DR. WARREN: Okay, do we have any questions for NCPDP?
DR. SUAREZ: Thanks for this testimony. It was very helpful too. The question I have is about the need and the type of operating rules that the pharmacy industry will see are needed basically. You have the standard. You have the implementation specification. You have several supporting documents that assist in the process of conducting a transaction and defining and almost eliminating a hundred percent any duality or any inconsistency or any interpretation in the standard. What are the parts that operating rules will benefit in the pharmacy transaction in the eligibility aspect and in their claims status -- are there any -- one that I saw of course was the connectivity aspect was part of the HITSP discussions incorporated into HITSP harmonized elements and then being adopted I guess as part of the rules. What would the type of operating rules that would be needed that you see would be needed for the pharmacy industry? Are there any that you can point to?
MS. GILBERTSON: Well, obviously there is a regulatory charge if you are doing eligibility verification and claims status which claims status is not germane. In eligibility verification you have to have something called operating rules. Part of it would be to bring it back to the industry and say is there anything we haven't addressed that we need to address or is there anything that hasn't been addressed in another document? Could we cite that document? Could we cite that guidance? What becomes of the operating rules? Then you open it up to what other needs are there.
If there really is a need to collaborate further on transmission that would be something that we would bring forward and work on, but you really have to ask the industry what problems are we trying to solve and if the problems that are brought forward has themselves because of these other documents then that is the proof that the criteria has been met. And we work forward on what the next set are. Just because the regs named certain things and certain dates that are due doesn't mean that operating rules can't be more overarching than just individual transactions that are named on individual dates. It becomes where are there gaps, what are lessons learned from partner organizations and things like that that we can address that haven't had a forum to this point. As of right now I can't give you a list of the pharmacy industry needs operating rules in these areas because there has not been anything brought forward.
DR. SUZAREZ: You are recommending or requesting to be named as an offering organization for operating rules. In my mind in the pharmacy transaction there is a defined standard and there is the defined for implementation specifications and then there is all these other supporting documents that you brought up actually in this presentation that have not been explicitly defined as required for the transaction. They are supporting documents that assist organizations conducted for transaction. Would you see those kinds of documents, those kinds of descriptions of how to conduct transaction and how to quality the kind of operating rules that NCPDP as an authorizing organization will bring forward to conduct pharmacy transactions?
MS. GILBERTSON: Yes, it definitely exists. We have the implementation guide that uses the CORE Phase II rules. That could be brought forward as operating guidance to bring forward. That is one of them now. Some of those reference documents that I named that you are referencing are named by reference because they are cited in our implementation guides so therefore because the implementation guides are cited under HIPAA they are by reference also --
DR. SUAREZ: Thank you.
DR. WARREN: Any other questions? Marjorie.
MS. GREENBERG: I have to admit I am not quite sure to whom I am addressing this question, but there is somebody equal in the room that I am sure someone may be able to respond if not our esteemed panel and I do thank all of you this morning. It has been extremely informative and helpful.
You commented, Lynne, on being a little fearless about what were some of these -- some of the language came from particularly about changes or corrections that need to made by the standards organizations in the current implementation guides and the question of whether something is conditional or situational, et cetera. I got the same feedback that this discussion was very active at the X12 meeting a few weeks ago and that everyone seems to be a little unclear as to where did this come from, what do we need to do, where are the actual problems and how do we correct them and how much time as you said is it going to take to do so which you can't really determine until you figure out what it is exactly that you need to do.
Am I correctly hearing that from you and I think - X12- the same thing went on, the same discussion with X12. Is there anyone who has a better understanding of -- it is not where this comes from because who knows where any of us came from actually at the end of the day. What is really intended here and what people do need to do to go forward because it seems like as you mentioned in all of these environments there are a lot of volunteers even if they are being paid by their companies, the government, who else, and even if they do get cookies sometimes at breaks. I heard that is only at HL7 not X12. I can't speak for NCPDP as to the cookie situation.
We kept hearing from Lorraine how are we going to get more people at the table and there is limited number of people at the table as spinning their wheels trying to figure what is going on here. What are we supposed to do? Does anyone have any insight on this and any guidance going forward?
DR. WARREN: At this point, Margaret, would it be good for you to give your testimony because I think some of the things you have to say may answer Marjorie.
MS. WEIKER: It may add some more questions.
DR. WARREN: Well, that always happens.
MS. GREENBERG: Because I really want to hear this testimony but unfortunately because of the break - we were supposed to break at 11:30, I have a teleconference. When I walk out, it's not that I did not like your response.
DR. WARREN: We are going to try and get back on time. Margaret, why don't we have your testimony real quick and then we can finish up with any questions both you and Lynne at the same time since it may help with Marjorie.
MS. WEIKER: Good morning. I am Margaret Weiker, Chair of the Accredited Standards Committee X12 (ASC X12) Insurance Subcommittee. I am also a Director of the Hewlett-Packard Business Exchange Services Product.
ASC X12 develops electronic data interchange standards and implementation guides for national and global markets, and includes among its membership standards development experts from health care, insurance, transportation, finance, government, supply chain, as well as other industries.
We are strong supporters of the reform efforts under the Patient Protection and Affordable Care Act to reduce the complexity and costs in health care claims processing, provider collections and reimbursement through increased standardization of common health care transactions such as claims, eligibility as well as standardizing and simplifying these common payer-provider communications are the cornerstones of reform efforts to reduce costs in the health care system. X12 and its member organizations are committed to working collaboratively in public-private partnership with industry and government to find workable solutions that achieve the ultimate goals of improving access, quality, and affordability of health care services for all Americans.
X12 has reviewed the language in Section 1104 and 10109 and offer the following recommendations to the subcommittee. In regard to operating rules, the provisions that impact the administrative simplification requirements under the HIPAA were enacted. One of the provisions calls for the establishment of operating rules for all HIPAA transactions standards. I am not going to read the definition of operating rules. We have seen that before.
The goal of operating rules is defined as creating as much uniformity in the implementation of the electronic standards as possible. ASC X12 supports that intent. The health care industry's previous methodology was that the implementation guides should not control the business processes of every health care entity, but it should be flexible enough to allow health care entities to define their own business rules. The implementation guides currently mandated under HIPAA which are the 4010 versions include a significant amount of flexibility, or variability in the content of the electronic transactions.
As the industry experienced the difficulties of such flexibility in implementation, the requirements in the implementation guides mandated for the adoption of 1/1/2012 which are the 5010 were tightened up and contained significantly less variability. Moving forward, industry consensus decisions will be reached to ensure that implementation guides published by X12 will include definitive requirements for each business function, eliminating variability completely or explicitly defining that variability so that every electronic transaction is implementing consistently across the health care industry. Thus, X12 will be meeting the stated goal for operating rules within their own development processes without the need for separate and distinct operating rules.
If operating rules are to be developed separately, X12 recommends the following. The definition of operating rules should be further explained in the policy to clarify that standards and implementation guides developed by the Standard Developing Organizations must control the data content of the transmission and the business rules and reference documents required to support the data content which are developed and approved by the consensus body of the SDO. Operating rules may not violate the intellectual property rights and copyright protections of the published IGs.
Operating rules must not duplicate, contradict, clarify or further restrict the format, content or usage requirements of any electronic transaction defined by an SDO standard and associated implementation guide. Such operating rules shall not impose further restrictions on the electronic transactions as defined in the associated implementation guide published by an SDO. Examples of operating rules are response times, system availability, communication protocols, hours of customer support centers, amount of claim history available for inquiries and real-time adjustments in the NCPDP world in regard to reversals, those types of things.
Effective dates for operating rules must coincide with the effective dates of HIPAA mandated adoptions. Operating rules must follow the existing DSMO/NCVHS/HHS processes.
I am going to go a little off script at this point in time and talk a little bit about the DSMO and the process. Due to testimony yesterday, this morning, and in reviewing the testimony that was posted out on the website there are comments about the X12 standards and the implementation guides and the problems associated with those. 4010A1 is by no means perfect. It had problems. There was a lot of flexibility into that, but we have to remember where we came from and where we need to go to. We came from an environment that had a lot of proprietary formats, six formats, the NSF which is -- there was always a joke about what that meant. You had the UB format and as I said many proprietary formats.
We went from that environment to trying to standardize into an X12 4010 transaction and there was a lot of angst just moving from there to -- from point A to point B. We allowed a lot of flexibility and we didn't everybody at the table at that point in time either which some people thought I don't need to go there. I am not going to worry about so they actually saw the guide and needed to worry about it which became the fast track in the agenda.
We go back in time -- one of the first times I was in front of this committee was to demonstrate the DSMO website for the committee and at the same time I was told during our lunch break to go on and figure out how to get these changes. People were coming to the committee and saying we need to fix this guide. We need this and this. I was tasked at lunch to come up with some process so we can incorporate these changes into the X12 guide so they were more workable hence the fast track.
The process still exists today. The DSMO website is up and running. Changes that I have heard people say they have put in operating rules. They have mandated the data elements. That was situational. Therefore, now it is required. Every time I finish transaction it is required. There is no more situation. I don't have a DSMO request that says for this data element please make it mandatory. We have done blah, blah, blah and have found that it improves return on investment by whatever or it is a whatever. And guess what? Those go through a process. There are provider organizations in that process.
There are also other SDOs in that process. It is a process that is very open to the public. Anybody can go out and look at a change request. They can see what status it is. There is even an appeal process. The person let's say submits it and for some reason the DSMO rejects the change. There is an appeal process even for that person to say wait a minute. I didn't explain that well enough. I now see what I should have said. They can go in and appeal it.
I would highly encourage everyone that this is a problem with the X12 transaction to please go in to the DSMO website and submit your changes. We are working on the next version of the guide, 6020. Now I don't know if those are the ones we will bring forward for adoption at this point, but we are working on the next version.
It is critical that we get these changes in at this point. I don't want to be sitting here knowing two or three years and hearing the same thing how 6020 doesn't meet my business needs. We need to get those business needs in now. And if for some reason you aren't comfortable with the DSMO website, by all means send them to me. I will get them into the appropriate work group and to the appropriate process or I can submit them through the DSMO website myself. I digress though.
Now I will continue on with my prepared text. In review and recommendation of operating rules X12 is supportive of naming NCVHS as the entity to review and recommend operating rules to the Secretary. In regard to effective dates of adoption requirements the effective date of January 1, 2013 for eligibility for a health plan and a health claim status operating rules, X12 believes this date will be disruptive to the industry.
The industry is actively involved in the analysis and development of the 2012 HIPAA regulations. Operating rules interjected during this time would force another development and testing cycle. Vendors would have to develop software for HIPAA regulated transactions and then a year later, remediate the software to include operating rules or potentially remediate. Providers and payers would have to analyze, implement, and test on version and then immediately start another implementation cycle.
The timing of these new operating rules could not be worse, as the industry will be fully engaged in the development and implementation efforts for ICD-10. Requiring operating rules that have yet to be developed and not even known to be needed, will introduce a significant distraction to the work being done in preparation for ICD-10.
In the future, effective dates for any named operating rule must be coordinated to coincide with the effective dates for the new versions of the transactions.
As policies that are developed for the compliance and certification provisions, the policies must recognize that the developing SDO is responsible for determining what is or is not in compliance as it applies to the data content and structure of each transaction defined. X12 will expand the criteria that define what being in compliance with our standards and implementation guides mean to assist in such compliance determinations.
X12 is supportive of the expedited and interim final rule making provisions, as this will allow us to bring forward new versions that support industry requirements on a more frequent and predictable basis. All three named SDOs, ASC X12, NCPDP, and HL7 international, have presented to this committee the need for a streamlined, timely and predictable process for several years, which we believe this provision addresses.
Now I am going to go off script to say a few more things. X12 also has the same concern in regard to the data values and the situational rules that Lynne mentioned in her testimony where a field is predicated on a value that is in another field. X12 has the same concern and as Marjorie mentioned we did spend some time at the last X12 meeting doing some analysis of the impact if you take it literally of what that would mean.
In regard to companion guides for version 5010 we are working with WEDI to develop a companion guide template. That should be approved fairly soon I hope.
A lot of people think the people at X12 are very technical. That is not the case. There is a subcommittee that I would point to and say is very technical and that is our communication and control subcommittee. We do have technical experts that are in that review to make sure we aren't violating the design rules of X12, but most of the people that participate in X12 and I would say are business people versus technical. If we ran a poll and asked them which side of the house they fell on, I think most of them would say they are business people. They are not the CXOs or anything like that. They are worker bee types.
Also, I would like to state that X12 supports the written testimony of the DSMO and X12 supports NCPDP being named as an operating rule entity not only for the pharmacy industry, but for the entire health care industry.
Now, you may ask me why did you go that route X12. One of the items on that we truly believe an operating rule entity needs to be ANSI accredited. There are essential requirements that an ANSI organization follows. It is consensus building. It is open. You don't have to be a member to participate. If there is a hardship to participate, that has to be addressed.
The infrastructure for NCPDP handles the operating rules in the associated workgroup task group without any modifications to procedures of processes. The NCPDP members also use a lot of the X12 standards. Now, it is true, claim status is really probably not germane to the pharmacy industry, but it is moving forward into real time more and more: real-time eligibility, real-time claim status, real-time submission of claims beyond pharmacy. Who better to assist the industry in moving there than NCPDP, who wrote the book on real time? X12 supports NCPDP begin named as an operating rule entity for the entire health care industry.
Thank you all for allowing me to speak today and I will welcome any questions you may have.
DR. WARREN: Questions. I am going to limit questions so that we finish at 11:45 so we can get lunch.
DR. SUAREZ: Just a quick clarification. Thank you very much for that testimony too. You are not requesting that X12 be named an authoring organization of operating rules. Are you?
MS. WEIKER: Not at this time. At this time we are going to work jointly with X12. I mean we are X12 - with NCPDP. Sometimes that hat gets confusing. No, we are not at this time. We are going to work jointly with NCPDP on that.
DR. SUAREZ: If I may, I think you delineated exactly the kind of issue that I have been so thinking about concerning – Lynne's, one of the slides that she had brought to me some of the concerns about administrative simplification. We create standard. We have implementation specification, implementation guides. We have operating rules and now we have an implementation guide for the operating rules which makes it -- it is hard to imagine.
There is clearly something that the standards and implementation guide will define and as you pointed out very well more and more so the implementation guide itself is reducing the interpretability if you will and certainly the flexibility too in many respects, but it is reducing the ambiguity of interpretation of -- this and that. In fact even in the situational elements as I read them in the guide, the situational element is required if. It is not a situational but they require is rule input. But there are still areas where and this is a question. Do you believe that there are still going to be areas where additional standardization of certain processes that are not this part of the scope of the implementation guide itself? It is the data content and the data structure, but processes that would be best benefited from establishing standards and that is where the operating rules will sit.
You provided a few samples of what operating rules would be, but those examples point to things like response time system availability, hours of operation, but are there more complete business processes that can be harder to standardize of all dealing with implementation guides provide -- for example, the eligibility transaction. The scenarios for eligibility information and the subscribers -- the subscriber dependent or the patient going to respond --
MS. WEIKER: They show up with an ID card. They show up without an ID card. They show up with the wrong ID card.
DR. SUAREZ: In many places those have been seen as undefined in some cases as best practices and common approaches that the industry in that particular area agree to follow, but are those the kind of business operating rules that you see an opportunity to standardize? And beyond the X12 role.
MS. WEIKER: I think so. If you think about it and we will use the eligibility and I show up to the doctor's office and I don't have my ID card and I think have Aetna. Wait a minute. They changed and I think it is CIGNA now this year or whatever they may be. I think as far as best practices and offering what do you do then provider when Margaret shows up. She doesn't have her card and she thinks she has Aetna, but Aetna has 50 plans or 50 different types of lines of business of whatever. I am not even sure which Aetna she may have. What to do.
I think those could be an operating rule. You need to find out her date of birth, gender, name, and use that to then inquire on the eligibility transaction and if you wanted to cross reference it to particular fields and loops and segments, you could even do that type of thing.
And then if you are coming up with use cases like that which is in my opinion use cases, you could come up and go there is something wrong here. We need to make a new data element for her shoe size or whatever because she needs orthotics. Then we can go okay now we need to go submit a DSMO request. We need to get this moving and what is a predictable cycle of every two years. Now you don't have to wait forever to get Margaret's shoe size unclaimed. It could be done in a couple of years.
I think those types of things where you use cases. You do this cross reference because you may find holes in both standards if need be.
DR. WARREN: Actually I think that example helps me a lot in trying to put all this stuff together in a hole where operating rules support standards because I was getting a little nervous when I was hearing that operating rules were requiring elements that weren't part --
MS. WEIKER: I get nervous about that too, Judy.
DR. WARREN: But then I grew out of an SDO. Anymore questions from the committee?
DR. FITZMAURICE: Thank you all for your testimony. I am trying to get a hint of a grasp of what we are facing here. People say that clinical medicine is complex. I think the way we pay for health care is very complex as well. I think we have a lot of different silos and those silos are served by standards developing organizations. Are silos justified by different business situations? So far yes. They have been justified by business situations.
I see the threat of government encouraged action, laws, and regulations first by the signs that X12 want to work with NCPDP to get things just right. I would be more encouraged if there were HL7, if there were the ASTM IEEE working together to fill in part of an architecture that I don't think has been painted yet about how do things fit together and whose responsibility is it.
I think it is an accumulation of use cases that eventually who blanketed the field or maybe we start this up and define business situations responsibilities and out of those comes a use case that make that across some of the silos. Force the silos to move together. I don't have an answer. It is the lack of being able to see how everything will fit together at the end that drives me crazy.
MS. LOHSE: Michael, I would just support that statement very much so. In the written testimony we provided from examples where -- can support the standards and more and more even the written testimony we provided some examples where the operating rules can support the different standards. I think we are going to see more and more whether it is in the clinical side or it is in the administrative side.
The interdependencies are significant and we do have them all complement one another whether it is between the standards or between the communications or among the entities exchanging data and that is definitely going to drive the principles the approach that CORE has taken to date. I really think we need to think about that as an industry your comment because it is critical and hopefully some of the examples we provide in the written testimony are useful.
DR. FITZMAURICE: I would rather see the recognition of interdependencies because of not considering those raises cost to everybody and for a long time we have not considered the interdependencies. It is looking at the top of the Washington Monument down being able to see -- this is how it is, this is how it should be, and here is who should take responsibility. I don't see so many saying the government should be the standards czar, the czar for how people get paid, but I don't see somebody coming up by default saying here is how we are all going to fit together. It is a gap that I see. Maybe that is just a comment and it is not a question.
DR. WARREN: Okay. It is almost 11:45. In fact two minutes shy. What I would like to do to get us back on time is have everybody come back at 12:30 and I know that gives people only 45 minutes. If you feel a need to bring your lunch back with you, please feel free to do that, but I don't want to miss any of the reactor panel or short them on time. Thank you very much.
(Whereupon, at 11:45 am, the meeting recessed for lunch)
A F T E R N O O N S E S S I O N (12:30 p.m.)
DR. WARREN: Please remember we are giving you 10 minutes. You need to be very
mindful of people who follow you so we are going to cut you right off. We are
going to have five of you present and then we are going to have a brief time
for questions. The first five because we had to make a couple of changes here
are Patrice Kuppe, Peter Cutler, Jeanette Thornton, Jan Estep, and Tim
McMullen. We will start with Patrice.
Agenda Item: Panel B2: Reactions and Perspective
MS. KUPPE: Good morning. Thank you to the committee for allowing me to come testify today. My name is Patrice Kuppe. I work for Allina, a large hospital, clinic, home health, ambulance, DME, pharmacy and lab provider in the State of Minnesota. I am also a member of the AUC in Minnesota, a member of WEDI. I have been a past member of X12. I am a member of CORE. I have been a past member of HL7. My life has been devoted to administrative simplification. We have to save some money people.
Today my testimony is not going to talk about pharmacy. It is going to focus on operating goals with X12 and also forms. I want to mention in 1104 it says not only operating rules for transactions, but to minimize and reduce the amount and complexity of forms. I think that final goal is to get to EDI.
What I am about to say is based on my opinion I vetted it with some people around my community, but I am wearing the hat as Patrice who has worked on this for many years, in fact, with welfare at the Minnesota Center for Health Care --
Why do we need operating rules? We want to clarify ambiguous terms we use. We want the rules to use X12 interpretation requests to help clarify things and in these I put in a lot of examples, but I am not going to read those because of my time constraint.
What we also believe we should clarify medical codes. In Minnesota we clarify medical codes also meaning that if there is a G code that mean you gave somebody a shot and an A code that means you gave somebody a shot. We all pick the same code.
We also believe that rules should be coordinated across all transactions. We did that in Minnesota when we created our rule/state implementation guides and we found a lot of inconsistencies as data was slow.
We need to clarify code uses by transaction. There is a bunch of codes called claims status remark reason codes and if you look at that code set there are millions and millions of codes in there and you have to figure out how you are going to use and map those per transactions. Right now our state laws are requiring us to do acknowledgements. The 277 claim acknowledgement is one that we are working on. We have 700 codes we have to walk through. We are only through 150 so far, but out of 150 79 do not make any sense for that transaction. It would be a travesty to have every provider in health plan do that on their own in this nation, and create their own maps for that. We need one way to map the message.
In the remittance advice we were the first place in the nation that mapped over 230 adjustment codes that group them with the right group and remark codes so when the provider gets a remit, I can automate what is going to happen because I know that that means the same thing to health plan A to B to C and what I need to then as a provider.
We believe instructions of usage should be there. The first example should be obvious, but always isn't to providers. That is an instruction for providers. Or instructions about if you are spending a birthday segment, what is it? It is the patient date of birth when the dependent is the patient.
We believe there should be technical rules. I think we can learn a lot from NASHA and also what CORE has done, but we need transmission standards and we need things like response times and obligations. It doesn't do any good to implement full-time electronic eligibility if the payer system is down all week and every weekend.
What should be in the rules? I believe we also should work on best practices. Minnesota said there are certain things we are not ready to write as a rule, but we are going to create a best practice and we are going to test it out. We have things around sending attachments because they are not ready electronically. We made rules around how to fax things in a standard form and all that kind of fun stuff.
I fought forever at X12 to get my data needs met for eligibility response. I said we need to have co-pays. We need deductibles. I need the 270 allow me not to send a member ID. That is why we have to go write a rule in Minnesota. And then again we have form rules as labeled there.
The timing of rules. The timeline really makes me afraid that we are going to waste millions and billions of dollars in our system. I am hoping that NCVHS can make some recommendations to fix the timing. I know it is in statute, but so was the health plan ID. We had to have by 18 months after 1996 and we did it. I have a feeling we can alter things that make business sense.
We also should do things in the order of the food chain. Eligibility should be our first rule because if we get that right then I will be able to send a claim correctly and then I will be able to get my remit advice. I showed this picture to Dr. David Blumenthal and he was so surprised he actually got it electronically and I said these red arrows are making me very nervous. This happens to be a Minnesota standard, but all the rest of these are what we are about to try to implement. Does it make sense to put in 5010, then a health plan ID, then a rule on this thing that we just did, and then put in ICD-10? Now we are going to go add a new transaction with its rule and then we are going to go claim attachment. The order of the transaction is sort of bizarre and the fact that the rule comes after the new version of the standard.
My theory is we already waited 12 years for 4010 and we are pretty automated. If we really want to increase EDIs, we need rules so we can show the value and people will then implement. I would propose we take a good look at the order of this.
And then by the way down here is meaningful use Stage I which I didn't put on this slide but I have it and meaningful use Stage II.
How often should we have rules? I think it should be often, frequent, and a minimum of at least once a year. That is how fast Minnesota has been doing it. To do our first rule it took six to eight months. This you can't probably read up there, but this is how we decided to approach our rule writing. We laid out all of our transactions and we did them in the order of I call it the food chain and then this is all of our voting steps and public comments and then the state register goes on and it becomes final.
Who should make the rules? I am not going to name an entity, but we need one place that is led by the users, providers and health plans. If you look at the makeup of X12 or CORE, you are going to see very low provider participation. Although they might have a lot of provider association, no lack of respect for the associations, but you don't live and breathe the world that a provider does and my staff does in trying to conduct it. The data needs are known by the people who have to get the data out the door and then get the data back in. Providers and health plans should have equal representation. Only members can vote. We do rely on the experience of clearinghouses, vendors, and security, folks who help us write the rules, but their scheme in the game is to help us implement not to make up the rules.
The entity should have a clear mission, guiding principles, and membership requirements. We need to eliminate barriers to participation. I can't afford to go to X12 anymore. You have to travel. You have to be in person. We need the entity to have web-based meetings. Minnesota rules are done over the web and the Internet. We have participation from national health plans that don't reside in Minnesota because we offer this method. In fact, we only have two people that support all the work in Minnesota and they are from our department of Health.
We need to expedite decisions. We need to have representation requirements and we need the liaison that is government and standards bodies. This is a quick picture of how we are organized. I believe people mentioned earlier the strategic steering committee is where our executives are housed. The work is all done here by operations and TAGS as we call them, Technical Advisory Groups. They vote at this level. It has to be vetted at ops. If we can't come to consensus then it goes to our executives who know that they have to get the job done.
Why do we need rules? I think you have heard this before. I am not going to read it all. We need to achieve simplifications.
Specific requirements about eligibility. You know it should be based on the data provider or patient can read from their card. We do not check eligibility when you walk in the door. We try to do it before you are at the door if it is not an emergency room visit. We need whatever that health plan ID is to be clear on a card so my registration person can figure out what plan to access and get the information back.
One of the examples is in the 5010. Member ID is allowed to be a requirement from the health plan for a provider. And I am like if they don't have their card, I don't have a member ID so how am I going to be able to check eligibility. That is why I am checking eligibility. That is an example where our rule in Minnesota says to the health plans don't require member ID.
Claim status. I pray that we don't write a rule around 276/277. That is a provider having to go to the plan. What is the status of my claim? And then the response. The 277 claim acknowledgement is what I should get back when I sent my bundle of claims. I shouldn't then have to go ask later what happened to my claims. If I have the hand shake when they threw them over the wall, I will know exactly what happened to them.
Other ideas. I do believe in certification. We need to coordinate with clinical standards. In our discussions in Blumenthal we said guess what. In Minnesota we are finding out if CCD is in fact standard. We have to write the rules around how we are all going to hook up and exchange CCDs. We need to see how what administrative transactions do with that.
Certification should include that if payer is compliant with their web portal not just your EDI. We want to expand scope of simplification. Eliminate multiple bodies. I am sorry to say it but we are faced with turf wars in this industry and so much confusion. I have been doing this since 1995 and I can't figure out where the goal for data needs. As Minnesota's AUC is trying to get fixed, there is a CARC/RARC code committee that is a website seeing that exists. There is NUBC who is now in conflict with HIPAA standards on a recent change on July 1. The NUBC and Medicare decided that this code was based on this charge date. X12 and HIPAA says no. It is based on transaction date. I have five and half million dollars in claims as of last Monday denied because the industry now wrote some weird exception that one level that we are not even aware of.
We need one place to own all these codes. Providers cannot participate because I don't have the money or the time to go do external committee, NUBC, NUCC, X12 and now in operating rules. If we forget all this data needs in one spot and then write X12 format syntax standards we might able to achieve the simplification.
Right now we are trying to create a model to bill medical homes in the State of Minnesota. We had to jiggy rig eligibility because when they checked the benefit for a medical home there is no way in the HIPAA 5010 or 4010 to tell me they are a member of the medical home. We can't wait until 6020 version to be able to be able to see that benefit. It is the new world and models are changing. There are other standards we need, for example, around provider enrollment.
I would like you to consider re-establishing timelines and maybe start with eligibility, write an operating rule then let's go do 5010 on that. Write an operating rule for claims then let's go implement that. There is no such thing as a big bang. Let's all go to 5010 at once. We should do it transaction by transaction.
I think I am repeating most of my -- that is it.
DR. WARREN: Pete Cutler from Washington State.
MR. CUTLER: As the chair said my name is Pete Cutler and I join you here from Washington State where I am employed as a special assistant for health care administrative simplification for insurance commissioner Mike Kreidler. I want to begin by thanking you for the opportunity to participate in today's discussions. I think it is really an important issue, a really important time and I don't have to remind you we have both a great opportunity and a great challenge ahead of you with a very tight timeframe. I am pleased and frankly honored to be able to be a part of this in any way and be a help to the committee.
It is great to follow Patrice because in many ways Minnesota was the inspiration for our legislation that was enacted just last year to tackle health care administrative simplification. Minnesota has been a great leader in this area and I agree with many of the points you just made.
For the past two years my primary, work responsibility for Insurance Commissioner Kreidler and to support health care administration simplification efforts and specifically by working on a number of work groups that have been created to develop best practice recommendations for several health care trainer's actions and processes including those dealing with eligibility and benefits, transactions, claims status transactions. Several letters and the first and my favorite coordination of benefit processes and timeline.
As I said last year a bill was enacted to accelerate the administrative simplification work in our state. The new law created both a framework in terms of public role, private sector roles, deadlines which basically required best standards be set in four areas by the end of this year 2010 and potential enforcement mechanism that the structure of the bill basically provided a framework for health plans and providers and I think we share their view from Minnesota that those are the two key players to come together and develop agreements on standards or standardized processes for dealing with these four areas and to do that by -- to get agreement widespread adoption of those standards by the end of this year or if that was not happening then the bill authorized the insurance commissioner to basically establish those standardized processes or standards using this rule making authority.
I can tell you that last provision not only put the fear of God into the health plans and providers in our state, but also of me. It has generated quite a bit of work group activity in the last 14 months.
The four areas that the statutes speaks to though with the establishment of a system to collect data to be used for provider credentialing, hospital privileging, and other health care system needs, enhanced eligibility transactions, eligibility and benefits and that required standardization on both batch process and in web-based delivery of information. A standard coding initiative and initiative provided to pre-authorization and a request or report dealing with potential for standardizing medical management practices.
The work on these initiatives have been carried out by I think four work groups which are composed to senior systems and business operations staff employed by a total of about 20 different health plan payers and provides about 10 of each roughly who are voluntary. Their organizations are volunteering their time.
Our office has an oversight role and is directed by staff to make sure that the process in terms of who is included in the work groups is inclusive and broad based. We created a partner with a private sector organization that actually provides the staffing for the work groups.
Insurance Commissioner Kreidler also has created an executive oversight group to advise him regarding the work of the work groups and the progress that is being made and that executive level group consisted somewhat with what the gentleman from Linxus mentioned is composed of the CEO level or senior vice president for operations for several major health plans. Some of are the largest clinics and hospitals and health systems in the state and also our state agency has purchased health care. The goal has been to make sure we have the top level senior engagement and commitment to the work.
The funding for the staff work which is being paid out actually by an organization, some of you may have heard of, called OneHealthPort which is a private entity as being funded by on a voluntary basis by health plans and large provider organizations.
I have given subcommittee staff copies of reports that have been prepared by our office and by OneHealthPort. For those of you who would like to see the details and specifically the best practice recommendation documents have been developed for request and receiving coverage information regarding eligibility and benefits or claims status can obtain that from the website.
Now, in addition to our work group activity I have also since about October and November of last year been participating on a couple of the CORE subgroups specifically the ones dealing with eligibility and claims status. The eligibility and the claim status, and to a lesser extent on CORE rules work group. I have the opportunity and I thought it was really frankly important to stay aware of what was developing with Phase III of those different operating rules to inform our work on our best practice recommendations.
We have been relatively limited in our involvement because we don't process transactions and I am the first to believe that you get much better products when you have folks who actually deal with the nuts and bolts of the operations on a day-to-day basis doing the work and having the discussions and making the decisions. I would be amiss if I didn't note that CAQH staff has been very open to our engagement and in fact encourage us to offer input even probably more often than I was inclined to do so, but there was certainly -- I would have to stress that it was a spirit of inclusiveness and openness in their approach to working with us.
The three points that we would like you to consider as you go forward with carrying out your mission is we think there should be a sense of urgency about moving ahead that our view is that there are basically the payers of health care, patients, lawyers. They all pay. They all bear administrative burdens, but especially health care providers suffer under a huge burden and huge costs related to our inefficiencies of our health care systems administrative systems and really think that it is important to keep that in mind that the status quo is not neutral. The status quo means that the providers continue to waste huge amounts of resource on activity that does not add value to patients.
We believe that by developing operating rules that we increase the possibility of the opportunity for the HIPAA transactions to become something that is actually attractive for a much wider number of providers to be using. Right now there is obviously less complete take up on the use of electronic transactions and we believe that one of the necessary preconditions to getting greater engagement will be to have operating rules that work from a provider perspective.
In terms of Washington State we think collaboration, inclusiveness, transparency are three critical principles for a successful process related to developing operating standards, our best practice recommendations in our case. That it is going to be very important and challenging to solicit and actively recruit the provider input that as a practical matter providers don't have the resources and financial know with all to have staff dedicated to long-term, ongoing projects unrelated to carrying out their operational duties. In Washington we have experimented with different ways of using technology and outreach and everything and Starbuck cards and all sorts of things to motivate attendance.
And last but not least we think that is to actually partially flow from the press release from the recent meaningful use regulations. National operating rules should set standards that are both ambitious and achievable and that are a constant tension. We believe this is where we may be a little bit on the outlier group. Beliefs they should be permitted to establish higher standards that meet the needs of the providers and payers in their states so long as the state enhancements build upon, are completely consistent with the national operating rules.
I think the best example I can give is for eligibility and benefits we want a whole lot more detail than if it requires for even CORE Phase I or II. We are fairly in alignment I think with CORE Phase III. I think it is good to have space where they have that engagement and motivation to work on efforts to keep moving the administrative simplification, work for it, creating some beacons for the national work and for other state work so we would think that that should be permitted, but encouraged with while completely accepting that base standards have to be adhered to and they can't be having obviously X12 standards vary state to state.
And last but not least we would -- we are glad to see the increased emphasis on certification, auditing, all the different steps that are going to be taken to make sure that the standards that are adopted really effectively getting it graded into the health care and delivery system for those entities who have invested quite a bit of money into developing systems that are compliant. It is a great source of frustration for them has to deal with -- that don't and as you know right now it is trying to deal as nothing. Most organizations don't feel it is worth the time or effort.
In closing, if there is anything we can do to stay in Washington to support your work, just please let us know. Good luck.
DR. WARREN: Thank you. Jeanette Thornton.
MS. THORNTON: Good afternoon. Thanks so much for having me. My name is Jeanette Thornton and I am with the America's Health Insurance Plans which I suspect most of the committee are familiar with what we do. We represent approximately 1300 health insurance plans nationally.
I am very pleased today to talk to you about operating rules. We believe that they are essential to really get us toward automating key business practices in the health care industry and really making sure that we are getting rid of fax machines, that we are getting rid of phone calls, and really moving to robust electronic communications that mean things both to the health plans and to the provider organizations.
We are definitely supportive of the provisions of PPACA to implement operating rules for the HIPAA transaction standards. As has been said this morning, everyone is aware that the HIPAA standards originally led to a lot of variability and implementation and I think we all recognize that it is time to move past that and achieve more uniformity in how we respond to the HIPAA transactions.
When I talk to provider organizations and some of the projects that we have been doing at AHIP, they continually come to me and say we have heard about that CORE work. We really think that we wish more health plans would implement it. It has really provided a lot of value for me in the plans that have implemented the CORE operating rules. I heard loud and clear the importance of more uniformity in the HIPAA standard transactions.
We believe that the implementation of development of operating rules by an entity separate from the Standard Development Organizations is an effective model. It is proven value. Value has been proven. The development of operating rules really does require a separate type of expertise from the development of standards.
As a result of this, we do recommend that the operating rules will focus on addressing business practices and the business needs while the Standards Development Organization really focuses on the more technical aspects of the standard.
We ask that the committee think about some common principles as it relates to the defining operating rules and are as follows. I think there is a lot of confusion out there about what the role of standards is and what the role of operating rules is and I think it is critical for the NCVHS to provide some recommendations in this area.
We all know that HHS should implement updates to the standards at a much more frequent basis. I think that would eliminate some of the need for operating rules, but certainly not all. There is still always going to be a need for operating rules.
We believe that operating rules should address both standard business practices, as well as business constraints on how a standard is used.
Operating rules can also fill important gaps that are not addressed by the standard at a much more iterative process. I think while it is important that the implementation cycles are started(?) up as has been mentioned, there also may be a need to implement operating rules once you have implemented the standard and said oops. It doesn't quite work as it was intended.
Also it is very important for there to be a public review process and comment process when it comes to operating rules to make sure that we really are taking for account all the various business needs.
One of the key aspects of the admin's imp legislative language was this whole concept of operating rules should not conflict with the existing standards and we think that this is a key point. There needs to be a much more defined process for both the operating rule entity to bring issues forward to the standards developers and vice versa.
And finally, operating rules can also address standard business practices. Things like response time, security, et cetera.
It is really critical to us that NCVHS only select one entity to develop operating rules independent of the recommendations by the pharmacy industry this morning. We think having more than one entity is just going to add chaos given the interdependencies of all the standards.
We believe that CAQH through the CORE initiative has brought together key stakeholders to implement rules that are providing value in the community today. As such we strongly support the designation of CAQH as the entity to develop operating rules under PPACA.
This process has been effective. We certainly don't want to throw the baby out with the bath water. We want to build on what works. We certainly acknowledge there needs to be -- we need to build on these efforts and make some enhancements to the processes.
First, we applaud CAQH for revising the CORE bylaws to have a much more inclusive process of providers, vendors, health plans, and the SDOs. They already have demonstrated leadership in updating the rules to be compliant with the 5010 standards and additional updates may be necessary.
It is also going to be key for the operating rule entity to partner with the Office of National Coordinator as the rules given to more of the clinical data exchange like referral and authorization and claims attachment are developed.
Now we understand that change in the health care industry can bring some ink and so as such we think that it may make sense to recommend for the implementation of the eligibility and claims status rules as a trial implementation period. Then we come back. Then we think about what works, what didn't work, and make refinements to that process going forward.
As my previous speakers have mentioned, there is a lot of work going on in the states and Lorraine asked me to speak to some of this specifically. What we don't want to see is a proliferation of state-specific operating rules and companion guides. We need a health plan that has to operate in many states and follow these separate rules it just becomes very problematic.
They provide some examples in the testimony in some of these state-specific activities which are all doing great work and they actually all demonstrate the need for operating rules because they have all said we need these standards to do more for us to meet business needs of providers. While they demonstrate the need for operating rules, they can't going forward a proliferation of state-specific operating rules. I think it is really important for NCVHS to make some recommendations and how it can fold in the state activities which have all done some really great things into the national process for operating rules.
What we don't want to have happen is and through the certification process health plans be certified at the federal level, but then that means that they are not compliant with state operating rules which they are required to implement through regulation. We are certainly willing to help facilitate some of these discussions at the state level.
I want to briefly talk about compliance and penalties. I think I will use the word significant. The $20 per member per day penalty in the legislation is significant. We really think it is important that NCVHS begin convening discussions on this as soon as possible.
I like to use the analogy of building a bridge. I think having the requirements only on health plans that use certifications is like building half of a bridge. We have health plans that are going to make significant investments in implementing these operating rules, but there are no corresponding requirements for vendors as well as providers to have to use electronic transactions if administrative transactions were deferred for the meaningful use. And we think it is critical that there be corresponding implementation requirements on providers and vendors as well as looking at how the certification applies on that as well. Without this we may not achieve the cost savings that the fees administrative simplification provision is really intended to achieve.
It goes without saying that we are very supportive of the operating rule provisions and really believe that they can really get at administrative simplification. It just needs to be viewed in the light of all of the other implementations, things that are going to be occurring at the health plan level to implement all of the health reform provisions as well as ICD-10 and to have to maintain a medical loss ratio of 80 or 85 percent. I would like you to consider that as well.
In summary, I would like the committee to think about the following points. NCVHS should recommend the designation of CAQH through the CORE initiative as the entity to develop operating rules under PPACA with the enhancements that I discussed earlier in my testimony.
The implementation of operating rules must be designed as a strong partnership between the Standards Development Organization and the operating rule entity. If not, this effort will fail.
The definition of operating rules should be developing to include both the standard business practices like response time, but also include constraints on a standard. The areas of the CAQH rules that provided the greatest value in terms of cost savings are things related for fighting constraints on standards.
The Office of the National Coordinator for Health IT should be involved very closely at the beginning of future phases of operating rules that get at more the clinical data exchange like claims attachment.
As I mentioned with regard to the state initiative, the NCVHS should emphasize the importance of having common national rules. At a minimum, the operating rule entity must be directed to take into account all the work that has been done at the state level.
There is much more deliberations and input that needs to occur throughout this process. I didn't even begin to talk about items like certification which is going to be a significant change for the industry. I definitely recommend that we will look more into both certification requirements as well as the impact of significant penalties and compliance on all sectors of the industry and the implications of this.
With that I wrap up my testimony and look forward to questions later.
DR. WARREN: Okay, Jan Estep.
MS. ESTEP: Thank you for the opportunity to be here. I am Jan Estep, CEO and President of NACHA, the Electronic Payments Association and today I was asked to give a perspective on operating rules from a financial services industry to provide perhaps parallels to health care. I submitted a very detailed written testimony on July 9 and I will only speak to highlights of that today.
I do believe that the operating rules that govern the ACH Network are relevant models for health care, and when faced with the goal of health care administrative simplification it is a yeoman's task ahead.
The ACH Network is an all electronic funds transfer payment system. It is used by over 14,000 financial institutions, more than three and half million businesses, at least 160 million consumers to make and receive electronic funds transfers or EFTs.
In essence, the ACH Network enables the direct movement of money and information from one bank come to another. It is most easily recognized by the direct deposit application that which allows employees across the United States from any employer to have their payroll received automatically at the financial institution of their choosing.
The network also supports direct payments of bills, business payments, electronic data interchange, ecommerce payments and international payments. In 2009 there were almost 19 billion network payments worth over 30 trillion dollars and the size and scope has well as a variety of uses of the network therefore necessitates that it functions as a state and secure network and is inclusive of all participants.
NACHA then is the non-profit association that is responsible for writing and administrating and enforcing the operating rules of the ACH Network, the NACHA Operating Rules. We bring together thousands of financial institution members both directly and through our 18 Regional Payment Associations. More than 450 other companies are directly involved through industry councils and affiliate membership programs.
Our core competencies are inviting operating rules and bringing diverse parties together. In addition to the NACHA Operating Rules NACHA also develops and administers the QUEST Operating Rules for electronic benefits bringing together the federal and state governments as well as the private sector and we also provided support to CAQH during its development of the CORE operating rules.
To provide a context the NACHA rules which are developed via an inclusive private sector rule-making process provides the framework for all ACH Network transactions. All participants in the network are required to follow the rules. By entering into an agreement that comply with the rules the participants become subject through a network rule enforcement mechanism. It ensures compliance with risk mitigation processes as well as ensuring standardized data content and errors really are not tolerated.
I would like to speak first to the distinction between operating rules and standards at it applies to the NACHA Operating Rules. In the simplest of explanations standards are the technical formatting requirements while operating rules delineate the roles and responsibilities of participants and the data requirements.
Standards address how you do it or the technical specifications while operating rules focus on who does what establishing the roles, rights, responsibilities and requirements of parties exchanging data and/or values.
Both operating rules and standards work together to establish certainty around the transactions, facilitate broad applicability and use, and really finds value to all participants.
This is a hierarchy and an interrelationship between operating rules and standards as standards and sometimes multiple standards are just one component of the rules.
Because the operating rules incorporate standards, changes or even updates to the standards and often new standards may not require changes to the NACHA Operating Rules. For example, our rules incorporate data format and requirements for all ACH transactions. This interweaving of rules and standards ensures that NACHA transaction regardless of who initiates it can be processed in an identical manner by anyone in the network. In particular, ASC X9 and X12, UN/EDIFACT and XML messages or data segments are all carried through the ACH Network.
Government-related mandates are supported in this way such as remittance information that accompanies tax withholdings or child-support payments.
The ability to evolve with the needs of participants is a critical benefit in private sector rule making. Essentially the operating rules can support innovation, efficiency, interoperability, security, as well as certainty.
I do want to take a few minutes to explain how the NACHA Operating Rules support these attributes and then speak a little bit about my perspective its applicability to health care. First, private sector rules do foster innovation. It provides the ability to adapt quickly to the evolution of the industry and its needs. During the past nine years, a number of consumer ACH payments initiated via the Internet have gone from zero to 2.2 billion because the rules have been adapted to technology. The ACH rules were first developed in 1974 and they have evolved tremendously over that time period.
Private-sector rulemaking does enable efficiency through broad reach and scalability. Because a common set of rules as developed with the input of the industry, we can connect virtually all financial institutions throughout the United States. This broad reach as well as adoption is key to efficiency.
Private-sector rulemaking also enables interoperability. The network in combination with the rules provides for uniform movement of the value, dollars, and the information regardless of the technology being used.
To the ability to both adapt and amend the rules to improve risk management, the rules also generates security. Over time the rules have been proved to manage risk management reducing the rate of unauthorized transactions to consumer accounts to an all time low and we have increased the enforcement of the rules.
Private rule making also creates certainty through the rules, network participants, and their customers have certainty in the way transactions are being processed.
The NACHA Operating Rules are amended through a deliberative and transparent and inclusive process similar to that used by federal agencies under the Administrative Procedures Act. All participants in the network, commercial and community banks, credit unions, large corporations, small businesses, consumer advocates, and industry vendors, all have the opportunity to comment on proposed rule changes. When rule changes are made there is a methodical, prescribed process by which options are considered, impact is assessed, and voices of all participants are heard.
The voting process also includes checks and balances so that broad-based support is accomplished and to insure that proposals can't be blocked by just a few members.
Our Regional Payments Association members vote on rules directly so that the voices of smaller community banks and credit unions throughout the country are represented collectively representing over 10,700 member financial institutions.
As part of this inclusive rule making NACHA also includes government entities to drive nationwide adoptions and since its inception NACHA has worked closely with the Federal Government. Today the Federal Government is the larger user of the ACH Network and we work with them closely.
In addition, the rules incorporate laws and regulations which continue to change. For example, the Treasury Department is currently in the process of adopting changes to how codes of federal benefit payments will be more readily identifiable to financial institutions to help them comply with a garnishment order. The formats held within the ACH Operating Rules make this possible. It is this responsiveness, balance, and adaptability, inclusiveness and an iterative process that has made this all possible.
Let me speak to three lessons learned. The first is that the balance and adaptability and inclusiveness are essential. If rules are raised at the national level through an inclusive process, you will achieve broad reach which is a requirement for efficiency. The rules require systemic solutions and data formatting for all participants that can facilitate straight-through secure processing with certainty.
The second lesson is to start early but recognize that you need to be adaptive over time. We certainly did not know everything in 1974 when we started. We have learned to adapt through opt-in programs and we also had added and regularly amend processing guidelines that are part of our rule book. The ACH Guidelines provide information similar in scope of information that could be contained within a single health care companion guide making it accessible and applicable to all participants.
The third and last thing is to be inclusive in rule making as well as in education. I would be remiss if I did not call out that education is a key piece of operating rules. Participants of financial services are as diverse as those in health care. They need to have training to understand the roles, rights, and responsibilities. Education is also a venue for innovation and for discussing business practices and with mandatory adoption in health care education and outreach will be important.
Lastly, there are very meaningful parallels between the efficiency and cost savings achieved in the ACH Network and those which may be achieved in health care. The US Department of Treasury's Financial Management Services indicates that the Federal Government saves 92 and a half cents for every ACH credit payment made instead of a check. For 2009 this translates to $1 billion of cost of the Federal Government simply by moving to electronic payments. The implications for health care are really vast.
In establishing operating rules and standards I do believe that they can drive efficiencies and significant cost reductions, but achieving this goal will require stakeholders to work together to take advantage of existing oversights and to leverage existing infrastructure and processes.
NACHA does have expertise in rulemaking that has been applied in many venues and we are poised to apply our core competencies as we can to the health care arena to ensure strong solutions. Our members believe that health care industry can obtain meaningful efficiencies and cost savings by processing health care payments and electronic remittance advices using existing rulemaking process, infrastructures and networks. The health care industry along with financial institutions can adopt operating rules that will drive administrative efficiencies and savings.
Thank you and I will also answer any questions.
DR. WARREN: Tim McMillan.
MR. MCMILLAN: Thank you and good afternoon. My name is Tim McMullen and I am the Executive Director of the Cooperative Exchange. I would like to thank NCVHS for holding these important hearings today and inviting to participate.
The Cooperative Exchange is the recognized resource representative for the clearinghouse industry for the media, government bodies, and other industry-related entities. Our mission is to provide open access for organizations to promote electronic transactions for that health care industry by ensuring optimal quality, value and functionality.
We have a nice mix of national and regional clearinghouses including ACS EDI Gateway, Availity, Capario, Claimsnet, ENS, which is an Ingenix Company, Gateway EDI, GHN-Online, HDM Corporation, Health-e-Web, Jopari Solutions, RealMed Corporation, Secure EDI, and The SSI Group. We also have as members two important organizations: the American Medical Association and the Health Billing and Management Association and also an industry partner CareMedic Systems.
We have been involved on a number of partnerships with CAQH CORE and also our members sit on -- all of our members sit on some WEDI task force or committee. We are very involved with the industry.
The clearinghouse's role is to be flexible. That is the value we bring to the health care industry and we intend to adapt to whatever operating rules are adopted. We support the concept of standardizing operating rules as a means to make what we do more efficient and of course the entire process more efficient thereby reducing the costs.
There are two areas which adopting operating rules would be useful for the clearinghouses and that include data content and infrastructure. For us standardizing data content both brings value and reduces cost. Data content can certainly help the industry move to more efficiency by requiring certain information be included in transactions such as, and this is just a for instance, patient deductible amount remaining and including the calculated allowed amount in the AMT segment of the A35.
While we implement patients, specifications provide the majority of format and data content standardization, we see semantic interoperability, that is, assuring that we attach the same meaning to data as one of the issues that operating rules need to address. As Patrice so eloquently put where clearinghouse is the issue, is the data coming back because different plans and provider groups interpret the codes differently. The code usage and their means have to be standardized. The claim adjustment reason codes are a prime source of confusion.
We feel also that if the operating rules are enforced that actually the companion guides can be something of the past.
I want to thank you for inviting the Cooperative Exchange to participate and we look forward to your questions.
DR. WARREN: With that we will open it up to questions from the committee and we have 10 minutes.
DR. SUAREZ: This has been very helpful but a very good panel. I think I heard consistently across the board number one yes we do need something for operating rules. It sounds like we do need something like that. It seems to me that there is a variation in what it means based on what standard transaction we are talking about. For certain transactions like eligibility there is some things that the operating rules can do and for certain other transactions those kinds of things are not necessarily the same and the level of operating rules perhaps might differ. I wanted to ask if that assessment or that sense is correct. In other words, the concepts around operating rules are different depending on which transaction we are referring to.
I especially like also the concept or the recommendation from Patrice about think of the code set element when looking at operating rules. It sounds like code set could be enacted around operating rules. Those two questions.
When we are thinking about operating rules, are we thinking certain things specifically by transaction and then secondly the code set parties is that something that you all agree that should be considered within the operating rules.
MS. KUPPE: This is Patrice. As the Minnesota group went through transaction by transaction, there was more need to assign certain definitions of data in some verses others. The operating rules to me are also technical things. I think that need is for everything because you have to talk about am I hooking rule time, batch, how often should that person be able to accept transactions. I think that is needed for all the transactions.
We didn't find the need in NCPDP transactions. We did in their old version, but when we went to look at D.0 they are already are sort of operating rules standards first body. NACHA is the same. I am just hoping they all get on the same playground someday. The AHIP person was like God forbid. We have 50 rules. I totally agree. I don't want anybody to think we are here Minnesota wants to keep writing rules. We don't. We want it at one spot because I have 400 ways. Now they don't want 50. We all just want one.
You have to define the data. At AUC we had to sit down. I worked with a health plan person who said if Sheila and Patrice get along to figure this out, anybody can because we are both Italian, strong headed. This is my data needs. But we had to keep saying the data is the data. A doctor saw a human being. What do we know about the human being? The provider knows their hair color and their gender and their data of birth and what we did to them or prescribed for them. Why is that data so different on a claim to payer to payer to payer? The same thing with the remit.
The remit is somebody deciding to pay you something and there are different benefits whether you are going to pay 50 bucks or 100 bucks, but the reasons behind why you paid are varied, but what does the provider really need to know? We don't need all 700 reasons because my action is I have to write it off. I have to bill the patient. That are some examples of everything sort of needed some definition, but there was different amounts.
The 999 transaction that Minnesota is implementing and it is an acknowledgement, we opened up the 5010 version TR3 and we wrote to our department of health people. We don't need to write a guide around this. It is that black and white. It is a handshake.
MS. THORNTON: I definitely think there is a need for operating rules across all the transactions separately, but I think one of the reasons why that you hear a lot about eligibility is because the CORE operating rules have been around the longest and also the eligibility transaction is one of the more highly utilized HIPAA transaction standards besides the submission of the claim. We have a lot more experience eligibility. Transactions like the referral transaction and the claims status are just not as widely used. I think if we were to see greater implementation there would be a similar need for detailed operating rules for those transactions as well.
MS. ESTEP: I am going to make a quick translation to the financial services world because I am not pretending to understand all of the health requirements, but I did mention direct deposit of payroll and something that I think a lot of consumers need in the United States and hopefully many of you in this room understand, but that is in NACHA operating rules terminology is one application of an SCC code. I am speaking language you don't know, but it is PPD credit to the extent that it is a payroll deposit it can also be a Federal Government's benefit statements. I mentioned benefit payments are not subject to garnishment which is a very unique requirement of a federal payment versus a direct deposit of payroll, but both of them use the same FCC code within NACHA, but they have very different uses.
To the extent that the operating rules are malleable and they can change when a regulation like that changes. We have literally said because we know the data format of the FCC code there is a field within there that can be valuable to financial institutions to help them comply with a garnishment order.
All of a sudden as regulation changes we can use an existing format. The operating rules can comply and that is the adaptability. Now it doesn't mean everybody needs to change, but if you understand how you can infuse flexibility in different ways then you can do it different ways for different needs. I think that is part of the reason everybody is coming to the table saying what is in an operating rule and what is in a standard. The fact is it may vary and it probably changes over time. Again, when I say adaptability is key, it really is.
MS. KUPPE: Walter, one point my neighbor reminded me of claims status I brought up earlier. I think 1104 says we are going to write a rule for claims status. I was promoting let's not write one for the 276/277. We only want the 277 CA because that is sort of the flow.
DR. SORACE: From the financial services world, how do you document at entities in compliance and is there some sort of certification process that they go through and is there an economic model for that?
MS. ESTEP: There is not certification per se. It is an interesting question to ask, but because everybody is bound by the rules and if you don't use the rules and if you don't use it consistently you are subject to a network enforcement rule and therefore subject to fines and NACHA administers those fines. It is really one where private rulemaking says the network is bigger than any individual organization and everybody has to comply.
There are processes all across the country that supports small and large organizations and the way to think about this is that complying and conforming with the rules, is there a ticket to entry? If they don't conform with the operating rules, they can't be valid participants in the network.
DR. SORACE: But there is no formal process.
MS. ESTEP: There is none.
DR. SORACE: -- fail and so two quick questions. Is there some federal or legal authority for that?
MS. ESTEP: No, it is all private-sector rulemaking. It can be done without mandating it at a government level although I would have to agree it helps from time to time -- but it can work.
DR. WARREN: I think I am going to call an end so that we can stay on top. The next folks that we are going to hear from are Jim McNiff, George Arges, George Langdon, Jerry Killough, and Barbara Mayerick.
PARTICIPANT: Is Jim on the phone?
MR. MCNIFF: (on phone) Yes, I am on the line.
DR. WARREN: You are up first, Jim.
MR. MCNIFF: Thank you. I first want to thank -- for giving me the opportunity to discuss -- because I am in the trenches of what they call the revenue cycle that these transactions effectively will revolutionize and should -- revolutionize how we conduct business between payers and providers.
Currently I am the head of what they call the revenue cycle at Montefiore Medical Center and it is important that I define a little bit the history of the term revenue cycle. The professional itself within all providers is changed as the field has expanded and our accountability has grown. If you have mentioned revenue cycle I guess seven years ago you may have not heard it that often. You would have heard the billing department, the admitting department. It was very segregated the departments. It was recognized at that point that the full process needed to be managed from the beginning point of registration all the way through the settling of the account. The term revenue cycle was defined to take in that full span of processing.
Even today which I think I heard in the first session about providers not being as active in some of the committees is that you may still have organizations where it may be called a revenue cycle, but the front end of the operation be it registration which is if you want to put a box of 270/271 transaction eligibility it is maintained by that staff. It may report to a different person. For the billing and collection which is some of the other transactions may report to a different person. As providers you may not have an integrated management structure that gets a sense the provider of the full scope of what all these transactions mean and the benefits that they can get.
At Montefiore I am in charge of all of the front operations, the registration, the emergency room, mandatory surgery with in patient and I am also responsible for the tail end for the billing collection, patient communication -- that deals with bringing in the cash into the institution. I have been doing this now for approximately 25 years at the medical center. I have been here 37 years, but it was also the control at one time and it was a great opportunity to make a contribution to Montefiore.
That it has evolved in Montefiore I think is a written testimony, but to kind of highlight certain points about Montefiore is that we have grown. We have now about 98,000 in-patient discharges. I have close to about 3.7 million out-patient services. That has grown from about 600,000 visits to 3.7 million out patients in the last 10 years.
It causes a tremendous push on the providers to deal with higher volumes of activity and pressures to reduce cost at the same time. In the revenue cycle's field we were looking to increase and improve our cash flows at our medical centers and in my particular case I manage all of the hospital during collection which is approximately about $1.8 billion a year I am responsible for. I have been increase cash flow, but at the same time during these periods of time with the budget constraints we have had we have not been allowed to. It is best to support that increase. We had to be very creative in how we go about that. Many providers have outsourced. Many of us use collection agencies where some of the hidden costs that are in the administrative costs.
In order to do that which recognize and again from the vision that we at Montefiore was we needed to transact business in a different way and HIPAA gave us that stability to -- and create our own vision of how we can see this meeting our particular goals and as a result also evolve the industry that we are all committed to the same goals.
I can tell you as being in the trenches and doing this and I have been doing it for a number of years and I will describe the transactions we do run. It has been exciting and at the same time it has been slightly disappointing in that I haven't seen it used quickly as I would like it to. As I see it in '97 we had these transactions and as of today there isn't payer or provider that I work with that I can handle all the transactions. That part of the discussions and meetings that you have had is learn how to expedite that and what is best structure to move that forward which is great to hear.
For example, for Montefiore to move forward we actually worked with CMS. I think it approximately four years ago and we were the pilot site in the United States that completed the attachment, 275 transaction and it was a success. As of to date that yet hasn't been fully implemented on either side, but we are -- institutions to do that. We have already done the 278 authorization with one or two payers. Rightfully so it is not completely and as the discussion as you have talked about here of strengthening the data that we get and the amount of data we get. We can drive our business -- is critical to us.
The more I have and the value which I would explain to you slightly different. Most people when they read administrative simplification, there seems to be a real focus on reduction of cost but being in the trenches for seven years now and I have been doing these HIPAA transactions there is tremendous other value that is tangible and intangible to doing these transactions.
For example, one that is critical to providers is that one of our main problems in improving our cash and payer's note as well is that we have denials because we haven't collected the correct information to make a claim free. We will send out claims that have the wrong insurance and therefore we get denials for eligibility and one of our values that we have seen in doing the transaction is that we have actually reduced their denials and separately improved already by doing these transactions. It is not only a cost factor, but also in addition to the other which I think is a major intangible and hopefully continues based on these discussions is the relationship between the payers and the providers.
Speaking from New York's perspective when we went into deregulation and you had individual contracts, it got very to the point where payers and providers -- you were spending a lot more time talking about the rates and negotiating them and at times the communications for the adjudication of claims was put to the side. What I found working with payers on these transactions is we are now more closely related to a paradigm we have ever been because we are all trying to attempt the same goal and process and looking at enough that you used an (?) or you don't send the right claims. It is not picking out the issues. It is how do we improve the process for both us because I think each side has recognized the value in getting all these transactions working and not only to the individual institutions be it payer or provider. The one that is in the midst of all this is the patient.
By having clean data or good data, quantity data, quality data, timely data makes the provider more effective and as a result we don't have as many bills going to patients that shouldn't be going to patients and therefore our customer calls are greatly reduced. Our patient saturates are higher. There are very few going complacent. The more that we get integrated with payers for both sides we improve that patient experience at our medical center.
There are a lot of tangibles that are -- we are making that as reflected as much to the technical side of the administrative cost raising.
DR. WARREN: Can you wrap it up in about two minutes?
MR. MCNIFF: Sure. As far as from a provider perspective, minus that we all as a group have a sense of urgency, and that if it is one agency or one entity and its operating rules or standards that need to work together which I believe they do because we have the same issue. We developed Linxus in New York is we recognize that -- entity really needs to be a complete partnership between payers and providers. I do think there has to be enforcement on both sides of the payer and provider to make this successful. They need to be a committed vision between all parties that we are going to work on this and set some strict time tables.
DR. WARREN: Thank you, Jim. George Arges.
MR. ARGES: Thank you. I am here today both for the DSMO and the NUBC, but I am not going to speak for the NUBC. I have already written NUBC statement and I just assume you read it. Suffice it to say that the NUBC supports the DSMO framework that has been written.
Also, after following Margaret and Lynne's recommendations of the written DSMO statement I better not go off script as Margaret -- and just read the statement so that I do not upset the DSMO and other members here.
Again, on behalf of the DSMO I want to thank you for the opportunity to comment. The DSMO is created by regulation for the purpose of maintaining the Health Insurance Portability and Accountability standards adopted by the Secretary. With the passage of the Patient Protection and Affordable Care Act it included provisions that affect the administrative simplification requirements under HIPAA. As such the provisions called for the establishment of operating rules for all HIPAA transaction standards. These operating rules are to be developed by a non-profit entity or entities through a consensus-based process and then subjected to review by the National Committee on Vital and Health Statistics and the Department of Health and Human Services.
The DSMO would like to offer our recommendations for the establishment of a process that can foster collaboration and coordination between the DMSO and the new entity or entities charged with the development of operating rules.
Since its inception, the DSMO has established a proven framework for the review and maintenance of HIPAA mandated standards. Initially the focus was to incorporate modifications to the original HIPAA mandated transaction standards, beginning with a fast-track effort resulting in the Accredited Standards Committee X12 Version 4010A1 and the National Council for Prescription Drug Programs NCPDP Telecommunication Standard Version 5.1 and Batch 1.2.
Once the fast-track review was completed, the DSMO turned its attention to other changes that have been or will be incorporated into future versions of the transaction standards. Each year the DSMO presents a report to the NCVHS on changes adjudicated by the DSMO review process. The DSMO process allows any interested parties to submit or view change requests and to view DSMO recommendations.
It is vitally important that the entity or entities responsible for developing operating rules coordinate with the DSMO to ensure that the industry recommendations for modifications and implementation timelines are consistent with HIPAA mandated transaction standards.
Coordination is needed to help identify changes to future HIPAA mandated guides and to ensure that any operating rules criteria being developed are supported by the applicable standard and are consistent in its interpretation.
Additionally, PPACA also seeks to establish an expedited process for introducing new HIPAA mandated standards; this too will require coordination with the DSMO, as new standards and underlying operating rules are being contemplated.
The DSMO recommends a framework for coordination and collaboration as follows. One, the entity or entities responsible for the creation of operating rules for each for each of the transactions must adhere to the consistency and conformity in each of the standards.
Two, the entity or entities' membership must represent expertise in the standards and demonstrate balance and consensus in their processes.
Three, if multiple entities are selected, they must all apply similar principles of consistency and conformity when approaching the creation and support of operating rules.
We recommend that the operating rules entity or entities develop and maintain an approved process for updating the operating rules. This can be accomplished by requiring this entity or these entities to become accredited by the American National Standards Institute.
We recommend that if multiple entities are selected and there is overlap with the HIPAA-named transaction expertise, that collaboration must take place within the entities for a single set of operating rules for that specific HIPAA-mandated transaction. The industry cannot effectively support multiple operating rules for the same HIPAA-named transaction. For example, we do not recommend multiple operating rules form multiple entities for the same X12 270/271 transaction.
Number four, the entity must work closely with the HIPAA Standards Development Organizations such as ASC X12 and NCPDP and HL7 as new standards or versions of the standards are being developed.
As industry requirements are being brought forward, standards need to be evaluated as to their appropriateness in the implementation specification or in the operating rules. For example, data content rules would be brought forward to the appropriate SDO for consideration of inclusion in the implementation specification.
The updates for the operating rules must be in coordination with the implementation specifications referenced. The schedule for operating rules updates must, when appropriate, be coordinated with updates to the implementation specification version in the regulatory process. The recommendation for operating rules updates must come through the DSMO/NCVHS/HHS process already in place today.
The DSMO also recognizes that the deadlines in PPACA require adoption of operating rules to the standards already be adopted. As such, the DSMO is suggesting four recommendations as a starting framework.
All operating rules must comply with the HIPAA regulatory language. The DSMO is offering assistance with evaluating potential operating rule entity or entities. The DSMO would participate with the operating rules entity on a rotational basis. This is especially true as DSMO representatives are industry participants today.
Coordination from the operating rules entities with the DSMO for upcoming rules to existing or new HIPAA mandated standards would require the DSMO review and approval process in existence today be used for the operating rules brought forward for consideration to the NCVHS.
A formal regulatory framework for handling the introduction of new operating rules for other transactions existing and future versions also be coordinated and collaborated with the DSMO prior to the rules being brought forward to the NCVHS.
Again, finally, coordination between the DSMO, the SDOs, and the operating rules entities is vital to provide the industry with a known, repeatable process capable of providing a consistent and timely process for updates to the HIPAA mandated transaction standards and the accompanying operating rules.
As the current DSMO Steering Committee Chair, I want to extend our thank you for being able to present this statement today. We will answer any questions later on.
DR. WARREN: Thank you. George Langdon.
MR. LANGDON: Hi everybody. Can you hear me okay? I am George Langdon. I am the Vice President of Engineering of GE HealthCare IT for -- thank you for giving me a chance to talk about the administrative standards here. GE's perspective in this regard comes from five different areas that my team has had experience with over the past 20 years or so, but first as a software vendor for revenue cycle, physician and hospital revenue cycle solutions out in the market place has been serving sites out in the world since the 1970s.
Second, from our outsource billing operations I spent a couple of years in the trenches that one of our speakers was talking about earlier using our own software to do that collection -- into the use of it.
Third, in the clearinghouse industry we do have a large clearinghouse where we integrate into those other applications or familiar with what has to be done to wire things end to end.
Fourth, as a software vendor to insurance companies for adjudication systems and that sort of thing. We also have a stake on the insurance side of the transactions.
Lastly, in health information exchange business which we started on top of our clearinghouse platform back in 2006 and the first thing we started doing was carrying insurance eligibility transactions. We have a lot of experience with that.
I am going to cover quickly the scope of operating rules. I think the scope discussion ought to be -- we ought to at least consider expanding it a little bit. Second, I am going to give you our feedback on the applicants we heard about this morning. Third, I am going to make some remarks on governance and then we are going to wrap up.
When we started implementing eligibility after the HIPAA deadline hit, we discovered that there was a lot of variability in the field payer by payer. You can only get certain levels of coverage information. We have as a private player in the industry dealing with the implementation of the standards as they were. We had to develop guidelines for how to get the most out of what eligibility you could get in a particular market. We don't with the variability ourselves by cataloguing what the knowledge was.
One of our speakers earlier talked about the need for a 277 transaction as the most important transaction. My customers don't have that problem because we spent years reverse engineering in existing non-standardized acknowledgement reports for every payer in the country into a standard. Our customers are experiencing life as if it were B, once that 277 standard is implemented, we have had it for five years.
There are things that we can do as a vendor to compensate for this, but when it comes to a particular specialty not being able to get the coverage information they need from all of their insurance companies and therefore not being able to use eligibility to figure out whether they can service a patient or not, that is something that we can't do without help.
When it comes to customers refusing to use the electronic transactions because the payers are putting up websites with better information than is in the electronic transaction, the payers are getting the cost benefit by shifting their administrative cost to data entry on the physician side instead of eliminating it on both sides. We can't eliminate that without a change in operating rules which goes beyond transactions. It talks about what kinds of information parity you are going to need in how insurance industry and the physicians interact.
A third example of this is payer operating cycles. There is at least one state Medicaid program that the eligibility you get for the first seven days of the month is invalid because on day seven they then load last month's new eligibility changes so they have to go reprocess eligibility for the first seven days. It is another example of an operating rule which is beyond the transactions but timeliness about the data that is accessible electronically a very important element here.
Lastly, somebody mentioned down time. In a typical physician's office payer system, up and down time for eligibility not that important. Some of my customers are academic medical center emergency departments. You know Saturday midnight is like peak hours. You got to have eligibility available.
Establishing operating rules which include the availability of the information with up time of that information, refreshments of the information extends beyond the other remarks would have been made today. I want to make sure people at least have that in their minds as you think about the commissioning of a group to you to clarify operating rules.
The second thing I would like to talk about is the applicants. At GE we are involved in all communities. My interpretable being admission today is for us to react to the applicant this morning. Our experience with CORE -- we have a lot of experience with CORE. We see it as a great place to have broad cross functional representation and we see these operating details.
The downside of CORE from our perspective is it needs even more physician representation than it has especially from the very small end of the market. We can talk about how one goes and gets one into that group feedback because we do that in the product development cycle.
From a CORE perspective we really like that broad representation of the practicality of the progress that we have been able to make. At the clearinghouse I will say it has taken me years and millions of dollars to get to CORE certification standards because of a couple of details of how we initially architected a product, but we are really close in that part of the product.
From a Linxus perspective, I and my team do sit silently in the Linxus meetings. The Linxus meetings kind of run themselves. Montefiore is a customer of ours and a partner running our billing software for many, many years, but it is very autonomous and chooses how to work. We monitor the Linxus and a number of other local pseudo standards organizations, communities of practice which come up to take the complexity out of a local community because business is largely practiced locally.
As a promotional vendor in the market, we need to stay on top of what is going on but it is expensive for us to do it. Our review of the Linxus group is it is very effective locally, but it is one of many effective local organizations and the issue is really about national scope and how to deal with a national standard to supplant regional fees. I believe that is the mission that you all have.
Lastly, in terms NCPDP which is I think the third applicant here. We are of the mature standards in the pharma industry. My question would be given the aggressive timelines that your organization has to provide proposed rulemaking I think that it is probably a long putt to get the right level of domain expertise -- really stood up with the NCPDP. If I am in your shoes, I am definitely looking for a single entity as you do on the clinical transaction side. We have a nice clean model. HL7 handles the standards and then IHE handles the implementation specifics as a vendor and all the things GE is. We have been engaged neatly with those and so can our customers in a broad -- to deal with that. We would like to see something similar happen on this side of the house. We are hoping that you will pick a single entity.
I loved Jeanette's suggestion of trying CORE on a provisional basis. I think this is really -- it is more your decision than mine about what is going on. I spoke to the experts at GE engaged with X12 and NCPDP and Linxus and CORE at lunch to find out their pros and cons here. Our overall recommendation is in line with Jeanette's.
Lastly, in terms of governance I think Mike's comments earlier about the need for an overall framework to help everybody see who is responsible for what and how they can engage effectively to influence things. That is something that is a little bit bewildering for us now. We are really working with a whole bunch independent standards and trying to create toolkits to rationalize that. As you can make it clearer, we can go to that standard very quickly and we can go faster and faster.
Let me recap. I think it is very important for the organization to think about broadly about operating rules. You probably want CORE if you want to hold the timelines, but you can have this -- I don't know how well they meet the requirements but it is your decision not mine obviously. And then broad engagement is best.
There was one comment, the Linxus group and I think Patrice also recommended that you add more providers to the process. I love that part. But the Linxus group also was proposing a cutting out the vendors and the clearinghouses and kind of other stakeholders from the proposal. I think we bring a perspective especially as you think about it. I work with a lot of one and two doctor groups and I handle their support cases. We really do what aggregator of that kind of experience with obviously with our own agenda as well. We are not a perfect antenna, but we are one way of getting what is going on in that part of the market.
Thanks again and I look forward to the questions.
DR. WARREN: Thank you. You helped us make some time up. Now it is Jerry Killough.
MR. KILLOUGH: Thank you. My name is Jerry Killough and you have pronounced it wonderfully well. I am the Founder and CEO of Clinix Medical Information Services otherwise known as Clinix. I have been involved in software design, support development and management for 33 years including the last 28 years in the health care industry. I also served with the government. I was on the President's commission for Manpower policy and the advisor many years ago and I am not even going to tell you which President it was.
My company Clinix, is probably the oldest company in health care delivering software as a service, aka, formerly known as ASP to providers and billing companies. We have been delivering SASS(?) since the 1980s, way before Al Gore invented the Internet.
Our Clinix PM, practice management system currently processes over 2 billion dollars of health care provider charges annually. We serve about 10,000 providers in 46 states. We are not quite the size of GE, but we are also privately held and we like it that way.
Our Clinix MD EHR system serves 23 specialties. It has over 3000 users across the country and is also deployed as a software as a service. We believe that and I think that our business philosophy and our deployment model of using software as a service gives us a unique introspective into the challenges of EDI.
Today I am representing the Healthcare Billing and Management Association because I am a member of the HBMA ICD-10 5010 task force which is across industry group of participants and stakeholders who collaborate together and we review and comment on proposed rule making.
HBMA just for your information although testified before this group several times as recently as December represents about 700 billing of revenue cycle management companies across the country, employs about 25,000 personnel all were member entities to employ those people and perform billing and revenue cycle management services for several hundred thousand providers that file 250 to 300 million claims a year. It is a fairly substantial representation of the industry.
Because I am culturally incapable of talking fast enough to read my testimony I am going to request that that be inserted into the record and I am just going to go through a summary to highlight a few things. I don't want to catch Lorraine's evil eye -- she was holding up a little card -- I thought she was giving scores -- then I realized it was --
NCPDP -- presentation was one of the problems and that is actually probably what I will focus on. A lot of the presentations have been more on the 30,000 or 20,000-foot level. I am probably going to be on the one-foot level because what we do is really where the rubber meets the road, what HBMA and its members and us as a vendor to many of those members as well as others in the health care industry we deal with the day to day realities of what you decide to do.
First of all on the state of the industry ANSI 4010 adoption -- it has not yet been achieved. I am sure you know that at least on a visceral level, but on a practical level it is just not there. Widespread adoption of the 837 claims process has taken place for reasons I will get into later and the 835 standards are in place, but they are not universal. In fact we have tremendous day-to-day issues with dealing with problems that come in the 835 remit files. We are pulling these from payers all over the country to putting them out there for our customers because what we are all trying to do is reduce cost and you can reduce cost through efficiency system, EDI code set, whatever can create efficiencies. That is really why we are all here today I think.
Very few players have adopted the 270/271 or the 276/277 transaction code sets. What we have seen happening in the industry is that -- I will get back to that in a moment also.
The eligibility piece. You have providers' staff checking eligibility one patient at a time on payer websites. This increases operating costs. There has been a lot of discussion about real time and while real time is necessary on the one-off situations, the walk-ins and so forth, you can really have more efficient use of the transaction code sets by clearing through batches. If you are in an office-based environment obviously it is not the same for an ER or for some other specialty, but for an office-based environment if you have appointments and you can check the eligibility before the patient presents. Front desk people are very busy. They don't have time to do eligibility checks or to do some of the other transactions that we are discussing today.
The batch inquiries are not compliant today. Actually your own line, your website inquiry capabilities are more compliant and more standardized really than your batches are. You have multiple varieties of inquiry format requirements and the response vary greatly in content format. I characterize them as one payer may give you a simple yes/no. They are eligible or they are not and another one may send you War and Peace in a free form text document that doesn't allow you to extract any kind of meaningful data.
The lack of standards in payer's efficiency -- it increases costs and we know that. Companion guides -- I am sorry. I disagree with a lot of the people that have talked about those today. I agree with others that agree with me, that they are actually used to circumvent standards. By doing that you have a technical adherence to a standard, but you have a nonstandard use of the standard if that makes sense. To say okay we are going to have this data element that represents X, but we are going to put N in it because that is what our system allows us to do better. That defeats the whole purpose and that is what we see all the time day in and day out.
We have adopted the approach that we do perform batch inquiries on the eligibility so that the providers and their front office staff can know in advance before the patient presents. Am I eligible? Am I not? What is my co-pay? What is my deductible? Some payers provide it. Some payers don't. Some payers provide it in ways that you can't in any fathomable way extract in a meaningful way to present to your users, your customers. I don't have any strong feelings about that, but I wanted to share with you.
Just as an example on the eligibility inquiry requirements, this is a study that my company did. It is a year or two old but it is still representative. This is just selected Medicaid states: Delaware, Florida, Indiana, and Kansas. You will see that these are the various combinations of data elements that you can use to perform an eligibility inquiry and the intent is that if one doesn't work then you can --
DR. WARREN: That is okay. You made up for it because you have Kansas on there.
MR. KILLOUGH: I studied the members of the committee. The idea is if one doesn't work, you can resubmit with another set of criteria and another and another and every state is the same. If you look at it from a software vendor's perspective, who is actually the eyes of the provider and the provider staff, unless you have millions of dollars like my friend down here from GE has, it is really hard to prove for every state, for every payer that you want to submit inquiries to. And you talk about cost. That is where your cost increases come in because ultimately somebody else has to pay for that. I guess it is the Reagan trickledown effect.
A couple more examples of Medicaid: Louisiana, New York. Look at New York. You have a subscriber member ID of 8 bytes or of 13 bytes or of 19 bytes or you can use the subscriber social security number, last name, first name and their date of birth. Just as an example I think it kind of points out the shape we are really in.
Industry impact. A lack of full adoption on the claims status. Claims are typically submitted in batches at the end of the day. Very few providers, very few systems file for claim in real time. As a matter of fact in the real world in a doctor's office in an office-based environment, very few practices actually post charges as the patient exits the office. They batch them up, post them at the end of the day. The system creates a claim and sends them out.
The idea of real time claims status acknowledgement is a little -- maybe it sounds good but is it really that beneficial. Payer response reports give somewhat cryptic information. I am being nice there on acceptance or rejection of claims. The accepted claims then they could really -- they go into a black hole because the payers aren't submitting regular updates to the providers and their staff or the billing companies on what is going on with those claims. That kind of goes back to the comment Patrice made earlier that the 276/277 really might be unnecessary if we just had a process to update the providers on what is happening with their claims. Think about the staff time and the cost associated with following up on claims.
People are still calling today on the phone to get a claims status inquiry. Some payers, I am not going to mention who, will limit you to only three patients at a time and then you have to hang up and dial back and do another three patients and hang up. I am not kidding. The process of claims status really is unnecessarily cumbersome as it is.
As with eligibility process above staff doing inquiries manually one at a time. I have already mentioned that. Usually the phone increases cost. Provider billing system should be able to transmit standard format batching inquiries, receive standard format responses as well as real time individual claim inquiries to all payers. I think personally the National Health Plan ID is an important element of this process.
To digress as Margaret did earlier, but hopefully not the same way -- that was not a negative -- think about from a system perspective if GE loses a client then I pick them up and the customer wants to convert their data from that system to mine. Typically they are going to convert at least the demographics which include the patient's insurance information which has to be supported by the insurance master and is dependent upon the code set that that local vendor has decided to use to say that this is CIGNA of Connecticut or whatever. The National Health Plan Identifier standardizes that, reduces the cost of conversions, reduces the cost of interfaces with hospitals and in particular their insurance code masters are very difficult to deal with.
The National Health Plan ID -- I know that was yesterday's topic. It really has a major impact on all of these things.
Summary since I have run out of time, payers implemented 4010 has been through the most which meant that they did first 837s and then the 835s kind of trickle along and we are still struggling with that. Most of them pretty much stopped without addressing the 270 and the 276 -- that is where we are today. The point being the 4010 is incomplete. Health care consumer costs are impacted the cost of providers to run their business. The things I have discussed all impact the cost of running a business and it eventually adds up to the national health care budget.
Provider administrative costs determine eligibility and track claims status directly affects the consumer. Lack of adoption via companion guides force higher costs to consumers. Companion guides are the bang of our existence. Absolutely positively.
Somebody made a comment about they wanted to do -- I think Margaret did. Do templates to standardize the companion guides. All you are doing is standardizing the format which kind of legitimizes the companion guide, but it is still is what is in there not the form in which it is presented. It is still not a standard. Companion guides are companion guides. I don't care how you address them.
We are tempting to implement 5010 when 4010 implementation is not complete. Cooperative exchange. Tim McMullen spoke earlier. We had extracted some summary data to show the percentage of adoption of 837 versus 835 versus 270 versus 276 supports what I said earlier. Payers did the claims first then the remits and then the rest got ignored.
And then finally, recommendations. Set individual deadlines for each code set or group of code sets. Somebody else recommended let's not do the big bang. Absolutely. Don't do the big bang. Make them each distinct and identifiable and what specific and unique deadlines for each code set. Establish penalties for non-compliance. Stagger the deadlines which I already mentioned. Allow a working 4010 code sets to be used prior to their respective 5010 deadline. Don't say that 4010 has to end the day. Say that 4010 for the 270/271 has to end on the date that its 5010 version has to commence.
Disallowing companion guides. That is a shocker, isn't it? Do not allow implementation of a code set prior to the established implementation -- that is probably controversial, but one of the big issues we have with MPI and some of the other changes that have occurred in the last few years were people pre-implementing and there was no way for everybody to know that they were pre-implementing. You had to find out the hard way by trial and error and getting things rejected. I would suggest kind of a national database that says for 5010 837 here the payers are ready. My company has been ready to test 5010 for months and we can't find anybody that will come in and test with us yet because the payers aren't ready.
Thank you. I appreciate it. Questions for me afterwards I will be glad to answer them.
DR. WARREN: We have one more speaker and then we will take questions. Barbara Mayerick.
MS. MAYERICK: Good afternoon, I am Barbara Mayerick with the Department of Veterans Affairs. I am the Director of Business Development within the health care line of business and I am responsible for the EDI infrastructure.
The Veterans Health Administration as a provider of health care supports and applauds the focus on creating operating rules that augment and support the full complement of revenue cycle transactions. While we as an industry have been conducting the HIPAA electronic transaction set standards for several years now, we continue to need to accommodate individual trading partner variability. AS a national health care system that interacts with nearly all health plans in the United States, this variability adds complexity and cost.
A broad base of industry stakeholders, providers, health plans, vendors, regulators and standards organizations are essential to developing operating rules by consensus-process rulemaking and voting processes that are inclusive and representative of a broad spectrum of these stakeholders and are also transparent and flexible.
Stakeholder participation in operating rules likely will be a different set of individuals or expertise than those that participate in the technical development of the standards organizations, as operating rules are the fabric that ensures the business needs are met. Operating rules pick up where the standards leave off in that the rules should define the roles, the rights, and the responsibilities of trading partners.
NACHA, as we heard earlier today, provides an excellent model where the operating rules are largely standards neutral, which has provided for great flexibility and large scale iterative and incremental business changes.
The use of trading partner specific companion guides should be eliminated by the adopting of operating rules, and the electronic transaction standard implementation guides should incorporate the operating rules in order to provide a single source of documentation. Data content and technical infrastructure of the electronic transactions should be standardized. Additionally, the covered entity certification process should require compliance with the operating rules.
In terms of VHA's experience, VHA achieved CAQH CORE Phase I certification for the 4010 eligibility transaction approximately three years ago. We made internal system changes which enabled the receipt of more than the minimal eligibility data that was required and this additional information allows VHA to increase the percentage of clean claims that we submit to payers.
VHA assisted CAQH CORE in testing the Phase II operating rules certification process, and we are currently making additional systems modifications to support the CORE Phase II Operating Rules.
Our experience with CAQH CORE initiative has been positive. Additionally, while VHA is not a member of NACHA's Operating Rules process, it has benefited from the mature infrastructure and rule making processes that exist. VHA implemented the Electronic Funds Transfer, which utilize the ACH Network, as part of our original implementation of the 835 Remittance Advice transaction set.
I would like to jump on the bandwagon here and also support what Patrice had to say earlier about the 277 claim acknowledgement transaction. VHA -- when we implemented our initial 4010 transactions, we implement, vetted, and our clearinghouse already had available to us non-solicited status messaging. That is what we did. We have been receiving -- we send our claims out and we just get responses from the payers that participate in that. I believe the clearinghouse has an incentive for the payers to provide that data. We have been doing that from the get go and that is beneficial. The thought of having to go back and do a mother may I and ask for that transaction isn't very attractive to us.
I would also like to echo the standardization of the code sets, the claim adjustment region codes. We at VA have been grappling to map and standardize how payers use these codes differently and then to put that in our system nationally. Minnesota has done that. We have done that. It has been time-consuming process. We have also tried to get the industry together to make some advances in that way and I know WEDI has a work group trying to get that done as well, but if we could have operating rules that address these things it would be a benefit to all of us.
I think that is all that I have. Thank you very much for the opportunity to comment.
DR. WARREN: Thank you. We are going to have another 10 minutes of questions and then everybody gets a break. Mike, since I cut you off last time, do you have a question? We will let you be first.
DR. FITZMAURICE: I am thinking.
DR. WARREN: In your testimony, George, you mentioned the use of IHE in this process. Can you give us more information on how you see them as a player?
MR. LANGDON: I was trying to use the reference of how IHE works with HL7 as an analogy to how I would like to see this decision-making process work. In our health information exchange business you work with the HL7 transaction standards analogous X12. Then we and the rest of the industry work with the IHE for implementation and all the specifics with that of how you really make it work. We would like to see a single entity named who would be aggregating feedback from the regional stakeholders and vendors and very broad participation to play that kind of analogous relationship to X12. IHE plays to HL7. I wasn't suggesting IHE -- I don't think they put themselves forward as a nominee this morning.
DR. WARREN: I had not thought of that before of having constructing profiles to be tested through the IHE process.
MR. LANGDON: There may be other analogies that might be applicable to help --
DR. WARREN: But it is that testing piece of the standard and making sure that everything works that you are suggesting.
MR. LANGDON: It is the relationship, the clarity of the governance framework that I am suggesting -- comments in the earlier part of the day. Part of the problem is how many different bodies does my team need to be engaged in order to guess where we are going to go from a standards and how much variation to deal with to the extent that it was as clear as -- it is X12 plus one and you are either dealing with X12 or you are dealing with the plus one and those two work well together. That would be magical in this arena.
DR. SUAREZ: Actually before and after that IHE work on profiles which in general describe they are not a standard development organization that describes how standards can be executed. It is a kind of one example of the concept of rules for implementation for standards because it applies more to the clinical arena with HL7 standards and all that. Having lived through the HITSP harmonization of standards process in which standards were vetted and selected and then profiles were identified as the mechanisms to implement those standards. I think that is an interesting perspective. I wanted to ask the panel if it is something that could be perhaps considered as a model for the adoption of these operating rules, a process similar to what HITSP had in place.
The Office of the National Coordinator is about to unveil a series of selected contractors to implement 11 different technical task orders for the standards, the next version of HITSP, the standards, harmonization interoperability framework in which that is very much part of the concept is how do we have -- we have the standards but how do we really make them happen in the industry by having agreement on how to implement them not just at the technical level, but at the business level. Would you consider that a good model or reflection of how these operating rules can be put forward, a HITSP like process, a harmonization like process? Is that totally different?
MR. KILLOUGH: Personally I would have to think about that a while. I don't really have an opinion right now.
MR. ARGES: I am going to go back to what Margaret basically said when she said she was going to go off script and I am going to go off script here, but reiterate I think what Margaret was saying here in terms of the importance those who are engaged in trying to make the standards work, really communicating back I think to the standard development organizations through the DSMO and others what they are finding out. And either we look to improve the implementation guide with more narrative, change the standard for future version as part of their process. The idea is to communicate that. If you don't communicate it, you have another layer who is basically doing something that is disconnected from the standard development process.
DR. SUAREZ: So the -- and it has been consistently mentioned as the thought is really we have right now the DSMOs, the committee, and the department of health and human services. That is sort of a sequence of how this process come and operating rules whatever the origin is should also flow through that process as well as your --
MR. ARGES: Right, it is interesting to hear everybody doing -- use interesting things here, but unless they communicate it and some have. I am not going to say that some haven't, but we need to have more of that and unless we have more of that you are not going to be able to improve the standard or its implementation. You don't know what you don't know in terms of problem areas until you begin to see it surfaced.
DR. SUAREZ: Is that because the DSMO process itself is something that necessarily a lot of people are aware of --
MR. ARGES: It seems to be the biggest little secret right now and through the last few years because we haven't gotten a whole lot of changes surprisingly and yet there seems to be a need for this. There is a big hunger out there for trying to improve the standard and you have various states doing various things and that is all interesting, but what they need to do is communicate to the DSMO process.
DR. WARREN: I would just like to comment. One of the things we start looking back in history because I was on a subcommittee when we lived it. Everybody has talked here about 10 years to get 4010. It didn't take that long to get 5010 because the DSMO and NCVHS got together and started looking at the timeline and then made recommendations to shorten it. Now in this particular act we no longer have to go through an MPRM to make these changes. We can go right to it and -- that should streamline this a lot better.
Maybe part of what we need to do is let people know. It no longer takes 10 years. We are on a much -- timeline and that may help people coming back to DSMO and making requests. Part of it could be an educational thing.
MR. ARGES: Absolutely. Sometimes we also entertain questions that may be don't involve the standards, but it may be a comment and maybe needs to go as far to the HIR and to a frequently asked question sort of thing. That would be very helpful if we can get that sort of reminders to people.
DR. WARREN: Mike.
DR. FITZMAURICE: Thank you Judy. I liked Walter's discussion and I liked any sort of discussion where everybody is speak away from script -- I saw some people giving very pointed things that they liked and things that they didn't like -- some people don't at least. The IHE I saw as a test bed. I have been a great fan of IHE for providing that test bed purposes. I wanted to get strong feedback to the SDOs to improve their standards and to vendors for exchanging uniform content which goes on the inside.
I see things go from -- normally with an exchange between two partners here at IHE exchanges by PDF and then recently start putting in variables in exchange to variables, maybe a simulated Word document. And then pretty soon they get to EDI. I see improvement along the way. I want to see the same kind of -- recognized by standards to become tighter. Congress recognized when they put out the most recent health reform. They want to move toward it. I am a little uncomfortable that maybe health plans need more encouragement to adopt even the original HIPAA standards. And maybe states need encouragement to become more uniform in the content of their HIPAA standards. I don't know if Medicare needs encouragement or not. I didn't hear that here.
I suppose you have to look at what is the payoff for becoming more uniform. Yes, there is a payoff. There is efficiency. Do we need to have it someway distributed so that those who are lagging behind have an incentive, a plus financial incentive to pick up the ball and run with the HIPAA transactions and then to keep improving them.
As we get not too far down the road, we move to ICD-10 and we start thinking about how do we think these data elements or claims data get built up from clinical information. Maybe it is through SNOMED's codes or through something else so that clinical and medical get immersed with administrative transactions when it comes time to pay and to judge quality at the same time and pay you more for getting quality. I am seeing that down the road and I am seeing how hard it is just to get the financial transactions and the eligibility done and there are lots more people working on it. I guess we have to hope the smart people don't retire and they will keep training the younger ones coming up to tackle these problems that refer smart people.
Does anything I say resonate or is it just -- no, it doesn't make a whole lot of sense but the words sound nice. I see some good things that were done. I see so much more that needs to be done.
MR. LANGDON: I would like to give a specific example of this. In 2005 my team implemented 276/277 at Washington University in St. Louis with United Healthcare and Aetna. It took us about six months to get our standard implementation to match those two payer standard implementation because all three parties interpreted the same standard differently. When we were done, the turn study showed an 80 percent reduction in labor for the customer when the customer was trying to do collections to the payer community because they only have to look at the exceptions. We check everything at night and they look in the one in ten. It really needed follow up with the insurance companies. Insurance company benefits. The physician group benefits.
From our perspective the level of difficulty was such that we put the project on the shelf. Washington University in St. Louis had this function running. They are the only one in the US for us who has it running because we are waiting for critical mass of standards around the payer community to be ready and we can really take cost right out of the system as soon as it is ready.
I don't know whether it is a -- I think there are ideas about changing the enforcement guidelines. I think your ideas about staggering the transaction implementations and then having very top standards and auditing of that process will help us all move as an industry, but there is tremendous opportunity just sitting there. We have referral authorization as well, electronic referral authorization sitting waiting for a good market to get the standards going. It is all built. It is ready to go. We are just waiting for the right magic to happen.
MR. KILLOUGH: The payers -– I don't want to sound like I am being totally critical of that segment of the industry, but they work on what benefitted them the most and that was getting the claims process going. And everything else that really affects the cost of health care doing business day to day in a physician's office is what is lacking. I echo what George said. We have had similar experiences with development of eligibility or claims status in isolated instances, but the level of effort required wasn't just -- investment. It wasn't something you could propagate system wide. It just can't happen under today's environment.
MR. ARGES: The other thing here -- it is a mindset change that I think is beginning to see things, but it hasn't really quite happened yet. You have some people who believe that if there is a code list that is used within the standard and they only care about let's say there is a code set that contains codes A, B, C, and D. They only care about codes A and B -- the systems around it and when you get codes C and D, they reject it. They are valid codes. They need to be able to know how to handle it. They need to be able to know how to process from that code list. The point is that you don't cherry pick the standards. You basically need to operate and learn to operate from the standard as it was laid out as part of that process.
DR. WARREN: With that I am going to let us all go on break. Please be back at 3 o'clock.
(Break)
DR. SUAREZ: Go ahead and get started again. I have been handed the gavel, which means for a few minutes which means probably I won't be able to ask questions. We are going to go to our next round panelists and I think we are going to start with Dan Powell.
MR. POWELL: Good afternoon. My name is Dan Powell. I am the Assistant Director for Operations at the VA Health Administration Center or the HAC in Denver, Colorado. I would like to say thanks again to the committee for allowing us to make these comments and be part of the discussion. I don't see Lorraine right now but I am going to make her day by saying my comments will be pretty short.
HAC administers a variety of health benefit programs for the VA; most of these are Veteran dependents, programs, for instance, Civilian Health and Medical Program of the VA or CHAMPVA. One of our programs is Veteran-centric which is the Foreign Medical Program.
HAC is aligned with the Purchased Care operation of the Veterans Affairs Chief Business Office or CBO. CBO Purchased Care operation serves as the payer and/or provides administrative oversight for the payment for all VA health benefit programs for Veterans and their dependents, i.e., it pays for all health care services purchased by the VA in the commercial sector which amounts to approximately $6 billion worth of care. It is considered a covered entity per HIPAA.
Other programs under the Purchase Care operation include the Fee Basis and Project HERO which are Veteran-centric programs.
I would like to briefly address the following six topics: the need for broad-based consensus over operating rules, a consolidated source for requirements a question regarding administrative simplification. The VA's experience with operating rules, our future plans, and implementation timeline.
In terms of consensus we see our broad based efforts that provide for equitable representations from all industry groups, for instance, providers, health plans, vendors, regulators and standards organizations is essential to operating rules development. A consensus view must be reached that accommodates all parties. This will limit extremes from any one group. Much of this has to do with equitably distributing the costs of implementing standards and rules that really work for all. No one group should be burdened unduly with excess requirements or costs.
Electronic transaction standard implementation guides should incorporate the operating rules in order to provide a single source of documentation. It would be an extremely complex undertaking to implement using more than one operating rule entity and for each entity named to issue its own documentation.
Certifying compliance to standards benefits everyone in the industry and will prevent some of the downstream issues associated with non-compliance. But one certification should include one consolidated set of standards, both transaction standards and operating rules, governed by one consolidated set of documentation and one administrative entity to deal with.
The VA Health Administration Center which is directly where I work fully supports administrative simplification realizing that sometimes there is an upfront cost and complex implementation to achieve a longer term result that brings true simplification and reduced costs. HAC has made every attempt to keep its EDI implementation standards based and simple. We have never issued a companion guide and by the way no provider has ever asked us.
VA Health Administration participated in the CORE III Health ID Card work group, which was really a very good experience for us overall. The VA payer voice was present at the table. Based on the reports I got it seemed like the group was slated somewhat towards the provider community in this particular case. With regard to the work on the Health ID card this did not seem to really cause any problems, but from our perspective which is just a cautionary note, it seems like every effort needs to be made to make the operating rule discussion again broad based and ensure that all groups are equitably represented.
It also seemed clear that this work group pursued a very aggressive timeline in order to complete their work. It wasn't just our VA representatives but other people on the work group a change to struggle keeping up with the timeline.
While the work on Health ID card did not particularly suffer in this case, it was clear that aggressive development can lead to ill-considered decisions from participants that did not have time to review work or proposals thoroughly and perhaps overlook complex, but hard-to-see issues, because they lack the time to dive into the details.
The VA Health Administration Center is seeking funds, either FY10 end of year funding or FY11 funds, to actually gap its current transaction functionality against the CORE II Operating Rules. HAC realizes that it will need to begin its upfront monetary expenditures in order to meet this ongoing requirement.
In terms of the implementation timeline, we feel like the 2013 deadline seems pretty aggressive given 5010 and D.0 and ICD-10 mandates adding both ANSI operating rules into the same timeframe will cause issues for VA payers. Again, this gets back to the ongoing effort to centralize IT functions within VA the relative lack of IT resources at the program level and the frequent need to undertake two contracting cycles; one for formulation of business requirements and one for IT development.
Listening to some of the comments today there was a variety of comments that alluded to the idea that what we really need to do maybe is re-sequence our implementation effort by transaction needs; first, eligibility and then building on that foundation. And rolling in the operating rules related to the transaction at that time. Actually that has some appeal to us. It sounds like a pretty reasonable approach to the whole thing, but it really would require retooling of our implementation effort at VA which would be pretty difficult if not almost impossible at this point given the environment in which we have to implement.
The other thing I heard today was the issue of expense and there was a little joke about millions going around and VA does have millions to spend though a lot of it is going to the clinical side right now. It is not going to the administrative side. Again, I appreciate the ability to make these comments. Hoping we are pushing your schedule ahead just a little bit here and I look forward to questions later.
DR. SUAREZ: You are indeed. Thank you very much. Nancy.
MS. ORVIS: Good afternoon members of the committee. My name is Nancy Orvis. I am the Military Healthcare System and represent information management. I am pleased today to present testimony regarding the Military Healthcare System's current perspectives on the topic of common operating rules as identified for implementation in the Public Law 11-148.
Just as a place marker on where the Military Health System is as a federal health care organization, we are a global medical network within the Department of Defense that provides health care to US military personnel worldwide. We have 59 hospitals, 364 health clinics, numerous shipboard medical facilities and mobile medical care facilities in theater, and areas of humanitarian systems. We deliver health care worldwide to a beneficiary population of more than 9.6 million service members, retirees, and family members through both military clinics and hospitals that we staff as well as through a civilian health network plan of providers across the United States and through parts of Europe and South Asia and South America.
The MHS is both a payer and a provider. As we may offer one of the unique perspectives here as a managed health care program with associated health plans we provide a health maintenance organization type benefit called the TRICARE Prime. We offer a Preferred Provider Organization plan called the TRICARE Extra, and we offer a fee-for-service plan called TRICARE Standard. As a payer, the MHS contracts with managed care support contractors and their fiscal intermediary sub-contractors to administer the networks of providers in purchase care and adjudicate the TRICARE purchased care claims.
As a provider with the associated, individual, and organizational provider identifiers, the MHS delivers direct patient care in our hospitals and clinics and in austere environments such as battlefields and ships.
At the MHS we understand the concepts and the intent and potential benefits of identifying and employing common industry-wide operating rules between the defined entities. Our managed care component understands that the common operating rules are intended to provide the standardized and commonly applied constraints expected to reduce reliance on the HIPAA administrative transaction companion guide.
In addition, we understand that common operating rules, which provide external constraints to the HIPAA Technical Report guides, may be much more flexible in terms of frequency of updates that may be applied against the transactions. We support that.
We understand too that the rules are the only constraints to broader allowances that exist in the X12 transaction reports and the NCPDP guides. The common operating rules may tighten tolerances and place limits on options while not loosening or going against what is in the higher level guidance. I am saying this because there may be some who believe that using common operating rules to make interim and pseudo fixes to the implementation guide and probably people earlier today mention that, but that belief is incorrect and we know that we can see where approved and ongoing use of common operating rules may drive future changes to the transaction guidance. It should because why keep non-used options in the guides if it is certain that operating rule constraints to the guides will be permanent.
In addition, the key points that we want to talk about -- implementation costs of common operating rules will likely be incurred across the specter of entities, providers, payers, plans, et cetera that use the transactions.
Software used by the providers has to be modified for the initial implementation and potentially on an ongoing basis as new common operating rules are released and mandated. Changes to this software at the provider level may also drive user interface changes for data input choices and along for those providers.
From a payer/plan perspective that function of applying common operating rules across these two entities and both are internal to us may limit flexibility that entities may wish to employ in terms of frequency of updates.
We want to have the committee consider that once common operating rules become a normal ongoing process there will have to be a very defined control in the number and frequency and management and much more complex rules for managing the updates.
The expectations are that the implementation guide versions will be updated and released more frequently compared to the last seven years and that operating rules have to stay in sync and be timely. There are budget and implementation impacts on federal health care entities as well as the broader industry when making decisions about how and when these updates are to be promulgated.
Part of the issue that I would like to bring today for the Military Healthcare System and the TRICARE plan is that there is no current baseline and common operating rules with which to compare or use planning or budgeting. We all as health care entities have to deal with that. It is going to be uncertain what those impacts on costs will be in the next few years and how to plan logically for that.
One of the issues for us is modifying eligibility software today in our case would be costly and benefits to MHS and military personnel might be limited due to the transportation of unused data payload. If we are the provider as well as the payer in the plan, those are internal transactions to us. We have found over 85 percent of our beneficiaries just have TRICARE health plan exclusively. It comes down to a very small percentage of transactions where we are checking for other eligibilities where it is actually necessary.
I will come to another issue though where other health plans do come to TRICARE and the Military Health System to check their eligibility, for instance, state Medicaid plans.
Right now one of the issues we are looking for is perhaps an exemption to compliance with common operating rules for HIPAA standard transactions of exchange between two covered entities within appropriate entities. And the problem is that one of these transactions doesn't necessarily deal with plan-to-plan exchange, and when Medicaid checks against TRICARE benefit to say first of all is this Medicaid applicant already under TRICARE, are they eligible, vice versa. There are issues related to that.
One of the things is under CORE Phase I eligibility and response transaction operating rules as written that apply to transactions from providers to plans not plan to plan. The MHS uses HIPAA eligibility transactions for an annual Medicaid and DoD eligibility reconciliation which is plan to plan. We recommend that NCVHS look into excluding operating rules that are intended for provider-to-plan/payer transactions and exclude the payer-to-payer transactions.
To summarize, the MHS understands and appreciates the projected benefits of common operating rules, while we are aware of initial and ongoing operational and technical costs. There are some unknowns, such as no current HHS directed industry wide common rules in place which makes us somewhat concerned about how big changes might be in the fiscal environment.
We have two requests that NCVHS consider a specific MHS exception to operating rules when transactions are between MHS programs areas, such as between the DoD provider entities and the DoD personnel systems. And two when the NCVHS adopts common eligibility transaction operating rules that the common operating rules not apply in federal to federal or state to federal payer-to-payer transactions.
The MHS is and has always been committed to being compliant with the HIPAA transactions code sets and identifiers and has been since the inception and they are not asking for relief from the HIPAA requirements but we ask that you consider this MHS perspective on these two areas of transactions as you make recommendations on operating rules.
Thank you very much for your time today and if there are any questions, I will answer them.
DR. WARREN: Thank you. Nancy Spector.
MS. SPECTOR: Thank you. I am Nancy Spector. I am Chair of the National Uniform Claim Committee and I am also Director of Electronic Medical Systems as the American Medical Association. The NUCC thanks the subcommittee for inviting our input on operating rules.
For those of you who don't know the NUCC is a national, multi-stakeholder committee. Its members represent providers, payers, designated standards maintenance organizations, public health organizations, and vendors. The mission of the NUCC is to support and advocate for the development, maintenance, and adoption of uniform data content and standardized administrative transactions in the health care industry and specifically we maintain the layout of the 1500 paper claim form.
The NUCC has reviewed the language in Section 1104 of the Affordable Care Act is it pertains to operating rules and because the NUCC maintains the NUCC Data Set for the professional claim, our comments are going to speak more directly to the professional claims.
The purpose of the NUCC Data Set is to present a single data set intended for use by the professional health care community to transmit related claim and equivalent encounter and coordination of benefits transactions to and from all third-party payers. The focus is on data content standardization. Two of the principles that underlay the NUCC's goals and implementation are standardization requires broad-based consensus among key parties and the professional uniform data set and associated attachment requirements to constitute the full extent of the data required by any public or private payer to process a claim.
The end product of the NUCC's efforts is one standard data set, with complete and unambiguous data definitions for use in an electronic environment, but applicable and consistent with evolving paper claim form standards. The NUCC Data Set serves as an accompanying document to the 837 professional claim implementation guide.
From our work as the maintainer of the NUCC Data Set it is our opinion that the NUCC Data Set contains the data content of the professional claim standard and the data content includes the data and associated reporting and usage rules developed by standards development organization as published in the implementation guides.
Business needs related to the standards that are not data content would be addressed in operating rules. The NUCC does see great value in the development of operating rules to address variations in such business processes as response times to transactions and lack of uniformity in the communication of transactions. The operating rules have the potential to make these processes more efficient, decrease complexity that exists today, and decrease costs for maintaining multiple interfaces.
The role of the operating rules -- Affordable Care Act explains the -- that the adoption of standards and operating rules shall seek to reduce the number and complexity of forms and that the Secretary shall adopt a single set of operating rules for each transaction. The NUCC supports this intent as it aligns with our efforts for administrative simplification and uniformity and standardization of data content and reporting.
The NUCC sees the intent of this language as addressing the current issues with hundreds of companion guides that we have today and we have talked about that already quite a bit today. The added complexity brought on by companion guides will hopefully be decreased if not eliminated by the introduction of one set of operating rules per transaction and the implementation of the updated HPAA standards. The NUCC is very supportive of any efforts to decrease the number and size of the companion guides as they exist today.
The introduction of operating rules for each standard will also add a layer of complexity. Today, organizations need to obtain implementation guides for each standard they are implementing, and organizations will now need to obtain the necessary documents for the operating rules. There is no central repository or access point through which organizations can obtain the documents necessary to comply with the HIPAA standards. The costs for each organization implementing and conducting the standards will increase as they need to locate, purchase, and integrate all this into their processing logic for the operating rules, in addition to the implementation guides.
The added expense may deter adoption of electronic transactions. The NUCC asks NCVHS to recommend to the Secretary to develop a funding process so the SDOs and operating rules developers can provide their implementation guides and operating rules to the industry free of charge or at a nominal cost.
There will also need to be close coordination and collaboration between the SDOs and the operating rules developers. The NUCC is aware of the DSMO proposal and we support that as you have heard from a few of the other DSMO organizations today. We do recommend that NCVHS establish a formal process for coordination between the SDOs and operating rules developers. We see the coordination between the SDOs and the operating rules developers will provide the opportunity for organizations to resolve any conflicts that may occur between standards and operating rules before each is finalized and before they are presented to NCVHS for adoption.
The Affordable Care Act includes language about the operating rules developers and the NUCC is supportive of the criteria that have been outlined in the law for the requirements of an operating rules developer. We would also like the subcommittee to consider a few additional criteria when evaluating the candidates.
First, the entity or entities should be accredited by ANSI and accreditation by ANSI would ensure that the entity meets the criteria in the law and ANSI accreditation establishes requirements for due process by the organization, and due process the way ANSI describes it includes the practices of openness, lack of dominance, balance, coordination and harmonization, consideration of views and objections, notification of development work, consensus vote, appeals process, and written procedures and I think you have heard using various pieces today in other testimonies.
We also think that ANSI accreditation would enhance credibility of the work being done by the operating rules developers and could later deflect any type of criticism that may come about regarding the operating rules development process and the resulting work.
Consideration should also be taken of the costs associated with participating in the operating rules developers' work, such as dues and meetings. There does need to be balanced representation of the stakeholders, and so costs need to be minimized in order for the largest number of organizations to be able to participate. Costs and staff resources to participate in the work are an added strain to the industry and do have a potential to limit participation.
Finally, the NUCC does not believe there should be any mandatory certification requirements for operating rules separate from the certification requirements that are outlined in the law for health plans. Once the operating rules are mandated, it should be assumed that all organizations using the associated standard are compliant and the current complaint/enforcement process would then be used to address any issues of noncompliance with the operating rules.
Another recommendation the NUCC would like to make is that the operating rules developer entities be required to notify the industry of their intent to begin development on operating rules a minimum of six months before or begins and this would alert the industry and the standards development organizations of that upcoming work and give everybody a chance to participate in that work.
The NUCC is very supportive of the naming of NCVHS as the entity to review and recommend operating rules to the Secretary. We see the importance of a single body reviewing the standards and operating rules to ensure they are consistent with one another and do not conflict and we also see NCVHS' current role reviewing regulations related to standards and other HIPAA requirements means that one entity will be able to identify various regulatory initiatives and evaluate the significance of each and determine the best timing for compliance based on industry needs and resources.
In terms of the timeframes outlined in the laws, the NUCC does support them. We do recommend that NCVHS consider whether or not pilot testing is necessary for all or some of the operating rules. Conducting pilots that are fully funded and include a wide range of stakeholders, as quickly as possible into the development process would provide a quantitative and qualitative evaluation of their functionality and value.
The Affordable Care Act established an expedited rulemaking process and we are very supported of this change. We do recommend the need to have a predictable cycle for the adoption of updated standards and operating rules and today's process is much too slow and I know others have already spoken to that today.
We recognize that the adoption for setting operating rules will be done based on the dates identified in the law, but for future versions we would recommend that the standards and operating rules for the same transaction be brought forward for review and consideration at the same time. Coordinating the review of the standard and related set of operating rules will allow for better evaluation of consistency and uniformity between them.
Again, the NUCC is pleased to see that the NCVHS will be serving as the review committee for recommending future updated and new versions of standards and operating rules. Although the law allows for the adoption of updated standards and operating rules every two years, we would recommend that NCVHS review the update frequency for the most appropriate timing. The review committee again can play a critical role in evaluating the industry's need and capacity to move to a newer version.
In summary, the NUCC appreciates the opportunity to participate in these hearings and present our recommendations. We do feel that the introduction of operating rules is a new concept into the administrative requirements and will be a significant change for the industry. We are pleased to see NCVHS playing such a key role in this and we look forward to providing further input in the future. Thank you.
DR. WARREN: Thank you. Tammy Banks.
MS. BANKS: Good afternoon. I am Tammy Banks, Director of the Practice Management Center at the AMA. The AMA would like to thank the subcommittee on standards for inviting our input on the adoption of operating rules to increase the value of the HIPAA standard transactions.
The AMA strongly supports the provisions in the Affordable Care Act which are designed to fix the problems associated with electronic health care transactions. These problems have significantly hampered the ability of the health care industry to fully automate its activities. The AMA supports the work that X12, WEDI, CAQH CORE have undertaken to identify and remedy the hurdles that have been encountered today and urge NCVHS to implement the Affordable Care Act administrative simplification provisions in a fashion that leverages and enhances both these efforts.
Toward that end we believe it is critical that NCVHS ensure that operating rules that as the necessary business rules and guidelines to be electronic exchange of information that are not defined by a standard or implementation specifications made all of the following six requirements.
Number one, we develop through a standards' process that engage in total quality management. We encourage a continuous process improvement loop be put in place that includes the testing of alternatives and best practices prior to the adoption of mandatory standards. This approach will assist to the transaction too and enhance the value of the next version of the standards.
Two, be developed in coordination with all the bodies involved in managing and updating the transaction code sets and standard identifiers. For electronic health care transactions to really work all four aspects of the transactions must be integrated and optimized as a cohesive whole. There needs to be an established system of communication and synchronization of all these efforts. In particular, there must be clear understanding of the issues that may be addressed in operating rules in which may only be handled by the transaction -- identifiers.
Presumably there is no question but that an operating rule may not change the definition, data content or use of the data element or statement in the standards add any elements or statements to the maximum defined data sets, use any codes or data elements that are either marked not used in the standards implementation specifications or are not in the standards implementation specification or changes the meaning or intent of the standards implementation specifications, but in an operating rule have an impact on the content of the standard or must a mandatory operating rules be limited to service level requirements and other rules that do not affect implementation specifications or other data content requirement. What is the most efficient way to get to one comprehensive uniform set of standards and operating rules that meets the needs of all the trading partners?
Three, be developed in complication with representations of all industry stigma. For electronic health care transactions to really work they have to meet the needs of patients, employers, health insurers, public payers, hospitals, and other health care facilities and physicians and other health care professionals. For this end we support the ANSI accreditation of any organization involved in establishing mandatory operating rules.
Four, be flexible. With that flexibility does not undermine the goal of administrative simplification. Health care transactions are extremely complex. Where it is possible we strongly recommend similar to NCPDP and X12 creating situational rules that apply only when a particular situation requires them rather than burdening everyone in every transaction with unnecessary mandates.
For example, today there is very small number of claims in which the amount recorded is in a foreign country. The situational rule in the 5010 version of the HIPAA claims transaction states that information indicated which currency is applicable is required to be recorded only when the amount is in a currency form other than the US dollar. This is a clear concise situational rule. Where all transactions are considered US dollars, unless a foreign currency is reported. This type of flexibility creates no obstacle to automation as it can be programmed and operationalized in administrative system, but this may warrant a clarifying regulation to permit this type of situational rule. It is in the Affordable Care Section Act 1104.
Number five, be clear and not permit variation between payers with respect to those situations in which they do apply. From the standpoint of a provider community which must interact with multiple, public and private payers it is virtually impossible to deal with all the variations that exist today except through auspices of one or more clearinghouses that can afford to program all the variations in their roles as aggregators.
Six, be developed in a timely fashion. The current standards setting process is a remarkable testament to the dedication and commitment of countless volunteers who work without pay except to the extent that they are employed by an organization that allows them to use paid time to work on these activities.
We have significant concern, however, as whether this purely volunteer effort is adequate for this task at this point. Affordable care lays out a very ambitious time schedule. We urge NCVHS to determine whether it may be necessary to augment the volunteer work force in some fashion to accomplish this critical objective. Indeed to fully automate the administrative processes of the health care system there are numerous challenges that must be addressed through some combination of refined X12 standards, operating rules, and our best practice guidelines where testing alternatives makes sense before a mandatory rule is adopted.
Among the outstanding issues facing the health care community are all of the following: operationalizing the national health plan identifier, streamlining, (?) forms and processes for initiating various electronic transactions, optimizing the electronic funds transfer and electronic remittance advice loop, analyzing and implementing the claims attachment standard, and fixing the deficiencies in the current 278 standard transaction that is intended to automate the sending and receiving of referrals or authorizations. This transaction in itself holds tremendous potential to reduce the current manual effort and hassle incurred by physicians and their practice staff to obtain prior authorization of medical services and to make referrals or send prescriptions or other orders on behalf of their patients.
Finally, we must emphasize the importance of enforcement. We are ever to get to the fully automated health care system envisioned by the Affordable Care Act even though compliance mandated by the Affordable Care Act. Even though compliance with the HIPAA transaction code set rule became mandatory for all health plans in October of 2004, many health plans remain out of compliance. This lack of compliance is slowly the adoption of electronic transactions by the provider community as a value of these transactions was dramatically reduced to the extent that they cannot be implemented consistently across all payers but which a physician or other health care provider does business.
It is extremely difficult for organizations particularly smaller practices to implement multiple workloads unless all of the practices' trading partners use electronic transactions that meet the practices needs. The practice will likely find it more efficient to continue to use manual processes which could be used consistently and effectively.
At the moment, problems with the current enforcement process is the fact that it depends on complaints. Physicians typically do not have time to file and are willing to file in any event due to fair retaliation. Moreover, the penalties even if they were to be applied are smaller than the cost of computer programming or clearinghouse fees that the health plan recurs to become compliant.
We believe the fastest way to increase the use of electronic transaction in health care is to simply ensure that all health plans are indeed compliant coupled with the addition of the continuous process improvement loop to identify efficiencies through multi-stakeholder pilot testing and ongoing refinement of the standard transactions to ensure they meet the provider as well as the payer community needs.
Physician compliance with the HIPAA standard transactions on the other hand is self enforcing. If physicians do not submit transactions in a compliant manner the payer does not respond. As a result physicians that want to use electronic transactions generally contract with the billing services and clearinghouses to ensure the submission of compliant claims and other transactions. Health plans that are unable to update their legacy systems or otherwise meet that the requirements should similarly be required to outsource these activities to clearinghouses or other intermediaries that have this capability.
We look forward to working collaboratively with NCVHS and respected stakeholders to bring about administrative simplification for physicians and others in the industry. Physicians will adopt additional electronic standard transactions when it makes economic sense for them to do so. The medical professional looks forward to the day they can leave the paper-based health care process for a fully transparent, fully electronic system. Such a system would dramatically reduce cost and complexity of the business of the medical practice resulting in increased time and resources that physicians can devote to their patient's care. Thank you.
DR. WARREN: Thank you. Michele.
MS. DAVIDSON: Thank you. I am Michele Davidson. I am the Manager of Pharmacy Technical Standards for the Walgreen Company. I am also a member of the board of trustees for NCPDP. I wanted to thank you for the opportunity to speak to you today on the operating rules. I will give you a short introduction and then explain to you a little bit about Walgreens and the current use of the transactions, the eligibility claim, and the claim transactions within pharmacy. I am going to try to spend the majority of my time on my recommendations for the panel.
As of June 30, Walgreens operated 8038 locations in all 50 states, the District of Columbia, Puerto Rico and Guam. That includes 7541 drugstores. We also operate worksite health centers, home care facilities and specialty, institutional and mail service pharmacies. The Take Care Health Systems subsidiary manages more than 700 in-store convenient care clinics and worksite health and wellness centers. I am not going to spend any time talking about the rule because I am sure everybody is very familiar with it by now.
As for as the eligibility NCPDP transaction, we have two different ways to determine eligibility using NCPDP standards. Using the Telecom Standard any version D.0 or 5.1 claim is basically adjudicated real time to the payer. Eligibility of the patient is checked by the plan processor and this is one of many edits that is informed on the claim. All this is done without the pharmacy after the claim is sent from the pharmacy to the plan. The claim is then paid or rejected in a real-time fashion. The editing is not part of the NCPDP standards. Only the response is part of the NCPDP standards.
The E1 or the eligibility transaction is another story. This is an NCPDP standard and a stand-alone transaction. This is how pharmacies actually can determine a patient. Medicare Part D eligibility pharmacy industry worked very hard with CMS in order to come up with this transaction, and Lynne talked about this earlier today. This is extremely useful when the patient does not have their insurance card or has recently changed Part D plan. The E1 transaction will return the patient's current Part D information within seconds, usually about one second.
The NCPDP E1 transaction -- we talked about business rules and how the imp guide maybe is not clear, but as far as the eligibility transaction on the NCPDP side especially with D.0 there, it is extremely clear and we worked very hard to ensure that we clarify everything especially with D.0. We make sure that the business rules were clearly defined in the implementation guide. Reviewed the fields clearly defined situations. If you look at it -- I wasn't going to put it all up on the screen. We painstakingly removed optional fields marked others as not used. The operating rules for the NCPDP E1 transaction by my opinion have no further need to be improved unless additional business needs are identified.
We also do use the 270/271 and if used in conjunction with formulary and benefits transactions the scripts standard by the prescriber on the prescriber side and we used it in order to determine patient eligibility information. It basically determines which plan the patient is enrolled in integrated health for pharmacy because if the physician uses that then if you get the plan information it would end up we don't have to then send back. Perhaps it could stop a call from the pharmacy. They may choose the right drug, the formulary drug because they know what plan the patient is actually enrolled in. That way they can do a formulary search and all that. It is very helpful if the physician does actually use this particular transaction in the script.
We also use this transaction when we process Medicare Part B as in boy claims to check for patient eligibility on the Medicare file.
Issues. We do have some issues with the 270/271. I would question whether the 270/271 on the pharmacy side can handle the pharmacy claim volume based on our experience with Part B claim because it's not always been a smooth one. For example, this particular year as you know we had a very active flu season and Walgreens in particular we process extremely large number of immunizations. In February the 270/271 was down almost the entire month. We could not get any eligibility transactions through the entire month. That is a problem if we were to ever need to use that as our main transaction plus the response time is usually less than 15 seconds which is not up to our normal pharmacy's standards which is less two seconds.
Claim status. NCPDP transactions do not use claims status transactions. Telecom Stat. Does standard actually -- the status of the claim is returned. Real time and response to the pharmacy claims. The only time we would possibly use it would be when we use an 837 which is rarely used in pharmacy. Medicare Part B claims do process using the 837 which would be a nice thing if that changed. Occasionally we do use for DME; however, we really don't use the claim the status even when we do process 837. It just doesn't apply.
Now to the recommendations. Pharmacy is unique since its on-line environment. It should not be treated the same as the rest of the industry. That is the way I feel. We have been conducting business on-line real time for 15 years and ask that you take that in consideration when adopting these new standards.
Consolidation of standards could lead to administrative burden for pharmacy; for example, we will require to adopt the 270/271 which would be a separate transaction instead of the NCPDP standard which is currently part of the Telecom standard or instead of the E1 standard could place significant workload on our pharmacy plus it would also increase costs due to the additional transactions.
It is essential that you consult industry when adopting standards used by others since they may have industry's specific guidance. In this particularly I am talking about the 835. This I pointed out because we actually have a specific 835 guidance. If we were to use say the 835 X12 companion guide, there are a lot of fields there that do not map to the NCPDP format. It would be a disaster for pharmacy. We have specifically taken and have an NCPDP standard 835 guidance. It is very important to take that into consideration. The same is true as you consider rules for the machine readable ID card, follow the NCPDP and WEDI imp guide.
Walgreens would recommend or would welcome the expansion of the NCPDP E1 transaction to commercial plans that facilitate the look up for all health care recipients under health care reform. Since all patients should have coverage at time would be better enable pharmacists to serve this new population that may not be used to carrying an ID card. It is just a thought.
Also, payer sheets. I know there has been a lot of talk about this and everybody else -- all the other health care people in this room disagree with me but I am going to say do not eliminate payer sheets because the pharmacy industry has to have payer sheets. We need payer sheets to do our business. We need multiple payer sheets. That is how we delineate the type of business that we use. One companion guide does not do it. If we had one companion guide, you would put pharmacy out of business. We could not bill. We have to have multiple payer sheets in order to be able to bill the different types of plans. That is how we determine if primary or secondary and all that. It is essential for us. And as I mentioned before I would love to see Part D processing pharmacy claims using an NCPDP telecommunications standards. Michael, they would be following HIPAA guidelines.
Developing rules. Basically developing of operating rules so hand in hand with business rules already established in the NCPDP standards. I showed you the example of that earlier. Operating rules should be brought forward and developed in the early phases of the standards development process to ensure compatibility with the standard and associated implementation guides, provides timeliness of industry participation and business requirement input. Adoption of standards could be done more effectively by accelerating and better organizing the regulatory process. We have also talked about that. It is essential.
Transmission. Transmission rules under operating rules. Pharmacy has been transmitting claims on line real time using NCPDP standards for 15 years; therefore, pharmacy should be protected under the Safe Harbor Act. Should be exempt from this requirement.
Situational rules. Lynne spoke to this in depth. I probably don't need to go in depth anymore about this, but once again we have well defined business cases throughout our implementation guides. I don't think there is any reason to say anymore. We are especially proud of our well laid out payer sheet template. I can't say anymore about that, but that really -- we worked very hard on that.
With that I will end with I hope that my presentation has helped to assist you in better understanding the unique needs of the pharmacy industry as you work to develop operating rules. If I can be of any further assistance, please let me know.
DR. WARREN: Thank you for everybody. Open for questions.
MS. TRUDEL: I want to go back to the payer sheets too because I am wondering when people say companion guides are terrible and we should get rid of them whether we might be throwing the baby out with the bath water. Is there something of information that is included in an X12 side companion guide that is actually necessary and how does it map to your payer sheets?
MS. DAVIDSON: I was thinking about that. I think part of the reason they say -- the rest of the industry maybe doesn't want multiple payer sheets. They are not real time online. Part of the reason that we have to have the multiple payer sheets is first of all we need it for the BIN/PCN where to send it and it delineates the business also. Maybe at the point where the rest of the industry and I am sorry catches up with pharmacy or gets to the point where they are real time online then they will understand they may need those payer sheets to be able to distinguish how to bill those plans and delineate the billing of those plans, but they are not there yet. Be careful what you ask for.
Right now the way they are doing business they don't necessarily need it but we do absolutely need it because we have distinguished where -- I am going to pick on Annette. Medco. Like she has a Part D plan and one may be Part D or it is the regular Part D and then to bill a secondary is the same BIN, but the PCN is different because that is how we bill for secondary and looks identical. The only difference is how to bill the COB portion and the rest of it is exactly the same, but we set it up in our system as two separate plans. It is like that throughout our system, but I have to have two separate payer sheets in order to do that. They go to two different places within her system.
MS. TRUDEL: Can I direct the same question to Nancy and Tammy? When you look at a traditional companion guide, is there any information in there that is specific to the plan that you would continue to need?
MS. BANKS: Well obviously there will be individual information and contact information and -- and some of the infrastructure information. That will be needed but I am definitely not an expert on companion guides. I would have to defer to --
DR. SUAREZ: This is a question for Nancy. I just to want to confirm -- your testimony you requested or recommended exceptions in two instances. One is within a legal entity where I would say is an area would be that unorganized health care arrangement in which there are multiple covered entities on the inside there organized health care arrangement and they are exchanging information that those operating rules don't apply in that circumstance ever.
MS. ORVIS: As I said one of our covered entities is our personnel eligibility checking entity which is DEERS eligibility enrollment system and the other is our own clinics and health care delivery hospitals that would be. They already have a lot of this information so having to go and do the fully compliant operating rules it would slow down our transactions in checking because we already have a lot of that information. We don't need to go back up and get the full set that would be coming back.
DR. SUAREZ: You just made me think about elevating that scenario into what HIPAA calls organized health care arrangement structures and inside those the co-entities which conduct exchanges and transactions and the application of these operating rules in there would also be --
MS. ORVIS: There might be other entities where there are employers who give health care to their own employees or there are staff models perhaps where that might be applicable too.
DR. SUAREZ: Then the other exception that you requested or recommended was when there are exchanges between payers, a payer-to-payer exchange. It sounded like you qualify that by saying operating rules that are --
MS. ORVIS: We would be leery on putting operating rules on that kind of exchange because that would cause -- the standard transaction works in there though it is not the -- but adding operating rules where the operating rules force one to be a provider and one to be the plan is not going to -- we can no longer use that transaction in other words.
DR. SUAREZ: But if an operating rule can be written that is directed to do two payers. In an eligibility situation probably then play very well, but in a coordination of benefits situation which is one of the standard HIPAA transactions there could be potentially "operating rules" that help define how payer-to-payer coordination of benefits is executed. Would that be possible in your mind? Because if I read your statement correctly, you said if it is a provider-to-payer directed operating rule, an operating rule that applies when the transaction between a provider and a payer don't make that apply to payer-to-payer relationships. That seems to make sense in mind -- transactions that are payer-to-payer coordination --
MS. ORVIS: Yes and there is more clearly that, but there is -- this one is a little -- I don't want to use the word kluge -- one idea would be to go and make a clear transaction that is directly for those. It doesn't currently exist that way. I have said recent the 50 Medicaid plans may often query us in this annual reconciliation to make sure are these people in fact actual TRICARE beneficiaries, yes/no, because we do some exchanges, filings and other things along that way.
I can see that two ways. You can go and make a new transaction that is specific to do that kind of thing and then you don't have to worry about operating rules that supply to that or you can just give relief in certain cases where that is being used. I think that is the cost benefit issue of how many new transactions do you really need to have to do the business. Are there problems or not in the way it is and so on?
DR. FITZMAURICE: Walter took one of my questions about the exemptions that DoD was asking for. I am not sure I fully understand them, but maybe it needs to sink in a little bit.
Let me go to Nancy Spector's testimony. You say that one of your recommendations is that there be no certification requirement and I looked back on that testimony to see why and the answer seems to be because the money is first spent the complaint and enforcement. Once you have the standard it should be followed. Why certify something that they have to follow instead make sure it is enforced? Is that kind of the sense of what you were saying?
MS. SPECTOR: Yes, we were just looking at it from the perspective of today with the implementation guides and the VAGSAL(?) transactions. There is no certification requirement. There may be some entities that do that voluntarily, but a function is if you are using a transaction, you are using it correctly. You are compliant and if you are not compliant then a complaint could be filed against you.
DR. FITZMAURICE: Next, NCVHS should consider whether or not pilot testing is necessary for all or some of the operating rules. I guess that means that NUCC thinks that maybe some of them should be pilot tested. Am I reading into that correctly?
MS. SPECTOR: Yes, this actually came up late in our discussions with pulling together the testimony, but we did have a couple of people who, one person in particular who spoke very much about the need for more pilot testing of all of those different transactions, the operating rules, all these different pieces come out in these requirements and there is nothing that is done in advance to test to make sure that the intent of what is being implemented will actually achieve what the intent is. We settled on the idea that maybe there are some clear understanding with some of the operating rules coming out, but on others maybe the pilot testing would help us better understand if there is value in bringing that out.
I think we heard this morning or earlier in the day some of the different transactions where they didn't think operating rules would be necessary and that would be an example of -- it would be good to pilot test that and know for sure before there is just this requirement that really doesn't have any meaning in the end.
DR. FITZMAURICE: That makes it clearer. Thank you. One recommendation is that future versions of standards and operating rules for the same transaction be reviewed and considered for adoption at the same time. And others if the standard covers more than one transaction, we would like to see all the changes that that transaction be done at the same time even if say five months later a different transaction under that same standard then will become mandatory. You want to focus on the transaction being implemented. Everything dealing with that transaction being implemented at the same time as opposed to a standard which may cover more than one transaction being implemented at one time.
MS. SPECTOR: The way we were reviewing the language with standard is there is a standard that has been named for each of the transactions. It wouldn't be that there is one standard that would encompass multiple transactions. Each standard of itself is a transaction. If you bring up claims and you know you are going to bring up operating rules to bring together. As you are reviewing them, you can see this operating rule is going to conflict with this part of the transaction or there is a gap and we still need something in the operating rules to address that gap or something. You are looking at them together and you can pick out those inconsistencies and fix that before adoption takes place.
DR. FITZMAURICE: Thank you. I appreciate that clarification too. Thank you.
DR. WARREN: Any other questions? Thank you very much for your testimony. The last panel of the day will be Janet Jackson, Randy Miller, Susanne Powell, Don Bechtel and Joe Miller. While they are coming up, I would like to explain to people a little bit about how we are going to handle tomorrow. Tomorrow morning we again start at 8:30. The first thing we are going to be doing in the morning is while we have all this wonderful talent in the room, we would like to as a group develop some use -- for using the health plan ID so that we can get a better handle on the granularity that needs to be identified and to exactly what the role of the health plan ID will be used for. We are also taking a look at possibly trying to put together and end-to-end graphic that will help people understand where it is used.
Following that and at this point I have no idea how long that conversation is going to last, but we have some time, a couple of hours probably on that. After that we have extended another invitation to CORE and NCPDP to present to us one of the operating rules and to give us some more information about that. They are going to be doing that. We have then asked Linxus to be a reactor to those two presentations and then again we are going to open it up for more dialogue. What I would like to be able to do if we have time, I am going to try to make sure we do, is we will put an open mic up so that people in the audience can also ask questions either about the ID or about the operating rules.
If anybody has any other creative ideas, please let Walter or Lorraine and I know so that we can account for those, but I think that is going to move us the furthest down the road in trying to get this task done.
With that we will start our last group of testifiers and Janet, I believe you are first.
MS. JACKSON: Thank you. Good afternoon. My name is Janet Jackson. I am the Director of Electronic Solutions at Blue Cross and Blue Shield of North Carolina. I am responsible for implementing, enhancing, and supporting our HIPAA solutions for providers. I am speaking today on behalf on our plan, an independent licensee of the Blue Cross and Blue Shield Association. We are a leader in delivering innovative health care products, services, and information to more than 3.7 million members, including approximately 900,000 members served on behalf of other Blue Plans. We provide health care coverage for nearly one in three North Carolinians. We appreciate the opportunity to offer our comments on the operating rules.
Blue Cross and Blue Shield of North Carolina have a history of participation in CAQH and CORE. We have actually participated in creating and are in support of the industry's collaboratively defined and voluntarily adopted CORE Phases I, II and draft Phase III operating rules.
The overall resource requirements, front-loaded costs, changes to business processes, and potential implementation of new technologies all of which will be necessary for health plans to implement federal mandates 5010, ICD-10, new benefit provisions, new standard transactions, operating rules, and certifications within the next five to seven years will be significant for health plans of all sizes. I echo concerns stated earlier on the operating rule timeline and order of implementations.
To reduce overall administrative costs, simplify the interaction between health plans and providers, and obtain a return on investment, it is critical that the operating rules are limited to those that have demonstrable business and financial value, while understanding that the cost and benefits of implementation may vary greatly from one organization to the next. For those transactions for which CORE operating rules currently exist and of which many in the industry are already adopting, it is important that we not spend additional time or resources creating new and different operating rules.
All stakeholders must partner together in this process, health plans implementing the standards and operating rules, providers implementing and expanding their use of electronic transactions while also working with their software vendors to integrate the resulting information into their systems. Otherwise, we will simply add costs and complexity to an already overburdened system, with no realization of the potential reduction in the administrative cost that health plans and providers share, which is ultimately passed on to the consumers of health care.
I am going to go off script here for a minute to borrow Margaret's term from earlier today to give you all an idea of where are with the HIPAA transactions. We have approximately 14,000 providers submitting 44 million electronic claims; however, we have less than 35 percent of our providers who receive 835 remittances. Approximately 15 percent who do an EFT with us, 30 percent receive electronic eligibility, and 25 percent of them execute claims status in the HIPAA transactions. We have the engine running and we need everybody. We all need to get on the same train and that is to borrow a line from my friend Harry --
It is helpful to think of operating rules as documented best practices gleaned from many sources including business, standards, and technical subject matter experts, and health plan companion guides. Existing operating rules are useful because they go beyond the standards and address data content usage, what types of data to use in common business scenarios.
They also address performance requirements and connectivity and security methods, none of which are addressed in the current HIPAA standards. Under the status quo, sans operating rules, connectivity and security methods are generally addressed individually in health plans' companion guides; therefore, they do not offer the cross-organizational uniformity of operating rules. It is important that operating rules be seen as a minimum level of what a health plan may return on a transaction versus setting an absolute level of what a health plan can return.
With the existing implementation of CORE operating rules, providers and software vendors have a level of certainty of how information is being processed and returned to them. Therefore, they are able to set up rules based processes to map responses from all CORE certified entities in a unified manner into the provider's patient accounting or practice management systems. This allows for the information obtained in the eligibility response to be used in other transactions, for example, ensuring that the member ID and demographic information is correct on the original claim; thus reducing the number of claims that reject for invalid member information. This increases the provider's claims first pass rate, which helps to shorten the accounts receivable days related to an episode of care for the provider. It also reduces the number of calls to the health plan for assistance with the rejections, and reprocessing of the previously submitted claim.
Additionally, with the implementation of operating rules, trading partners are not dependent on individual health plan's companion guides to give them the information that they need on what connectivity or security protocol to use, or to map information differently for each health plan. This increased uniformity encourages higher levels of adoption, thus improving the timely return on investment for each of us.
The main reason I traveled here to testify is to share Blue Cross and Blue Shield of North Carolina's experience with implementing operating rules. From a business perspective, our providers needed and were demanding more detailed benefits and financial information at the point of patient care. We knew that a real-time robust eligibility response would meet their business need.
At project initiation, although we found it difficult to attribute a direct return on investment based on a quantifiable decrease in call volume or an increase in claims first pass rate, our senior leadership was forward thinking and committed to advancing interoperability via CORE Phase I adoption.
Prior to implementing our eligibility project in 2007 to become CORE Phase I certified we offered a basic HIPAA 271 eligibility response which included member demographics, the effective dates of the member's coverage, and general coverage information related to deductible and coinsurance. We did not have a real-time 270/271 capability, could not meet the CORE connectivity, availability, and response time metrics required for certification, and needed to add more data content regarding benefits and patient financials. In other words, we had a lot of work to do.
As part of the project, we significantly enhanced our HIPAA 271 eligibility response using the CORE Phase I and most of the then draft Phase II operating rules related to eligibility for data content, financial performance, connectivity, and security. Our technical solution provided near 24 by 7 real-time availability and standard connectivity requirements for our local trading partners. The implementation costs for this work exceeded $2 million.
During the first six months following our implementation, we processed 1.2 million real-time eligibility transactions. By contrast, the first six months of this year we have processed over six million transactions. We forecast that we will increase our monthly volume to 2.5 to 3 million transactions per month by the end of this year. Lynne spoke earlier today about an average of a 24 percent transaction growth. We have experienced 200 to 300 percent per year which proves that the information is valuable to our providers.
Our experience of increased transaction growth we believe is a direct result of implementing real-time capability using the CORE operating rules, a delivery of more robust content, one connectivity method, standard hours of availability, and expected response time. All the rules work together to allow clearinghouses and patient accounting or practice management vendors to build the capability into their applications to that an eligibility inquiry is automatically kicked off each time a provider registers a patient, or even the night before using the provider's scheduler. The information that is returned in the eligibility response is mapped into the provider's claims system resulting in claims being submitted with correct member ID, name, data of birth and faster claims processing and payment, which ultimately leads to higher member and provider satisfaction.
Do we believe that this success story will occur for us on every transaction? No, we do not, unless a measurable return on investment and business process improvement based justification is used during the operating rules development and vetting process. We believe that there are some transactions in which operating rules will have significant positive impact and show a return on investment. The operating rules requirements for 2013 include eligibility and claim status, which will benefit from the current Phase I, II and draft Phase III data content and usage rules, real-time availability and performance standards. The operating rules requirements for 2014 include remittances, which will benefit from data content and usage rules; for example, consistent mapping of health plan proprietary denial codes to claim adjustment reason and remittance remark codes.
Some of the transactions identified for 2016, authorizations and premium payment, will not show a return on investment for our health plan. We are not a referral-based health plan. Both of these transactions have low or no volume within our health plan, so achieving any return on investment will be difficult at best.
We currently receive 94 percent of our claims electronically; therefore, operating rules for claims would not drive significant transaction growth for us. However, if the operating rules were to include the 277CA as the standard acknowledgement for claims, then the clearinghouses, vendors, and providers would have one version of error reporting for claims that fail implementation guide or payer specific business edits, instead of the many different proprietary versions that exist today. Thus we will achieve industry-wide administrative simplification of this error reporting.
In summary, Blue Cross and Blue Shield of North Carolina supports the existing CORE operating rules, development process, and voluntary implementation in independent certification process. From an interoperability perspective, we believe it is important that a single entity, knowledgeable and experienced with business processes be responsible for defining the operating rules and that CAQH CORE is qualified and well positioned to serve in that role.
It is important that the rate of adoption of standards and operating rules be structured so that the entire health care ecosystem can absorb and adjust to the changes. If all impacted stakeholders especially health plans and providers work together to carefully consider improved business processes and expected return on investment early in the opportunity selection process, and be committed to an increased exchange of information electronically, there will be significant opportunities to move the industry towards the interoperable capabilities that will prove to be one of the cornerstones of administrative simplification and cost reduction. Thank you for the opportunity to meet with you today.
DR. WARREN: Thank you. Plus I had forgotten to announce that Bill Alfano and Jean Narcisi have turned in their testimony as written testimony only. They won't be presenting. Just so you know we have let everybody speak that is on the list. Randy Miller, are you on the phone?
MR. MILLER: Yes, I am.
DR. WARREN: It is your turn, Randy, whenever you are ready.
MR. MILLER: Thank you very much for the opportunity to speak today regarding the operating rules. The National Medicaid EDI Healthcare Workgroup recognizes the value that adopting operating rules will have in advancing the existing standards for information exchange. However, we do have to consider some specific facts that are impacting the Medicaid program today.
First, state Medicaid programs are experiencing financial strain due to the current economic conditions and increased enrollment in the programs. A Kaiser Family Foundation report recently indicated that at least 29 states were considering additional mid-year cuts in provider rates and program benefits.
The Patient Protection and Affordable Care Act also include multiple requirements for which Medicaid programs need to comply. Those resources to allow Medicaid programs to comply are becoming increasingly scarce to work on the efforts that Medicaid needs to comply with other portions of the care act.
State Medicaid programs' Medicaid Management Information Systems vary in size and many of them are old systems that needs significant revision and many states are in the process of going through revising and replacing their current Medicaid information system that processes their claim statements for eligibility verification. Many of those states are doing that as an effort for the ICD-10 compliance which is due October 1, 2013. While we support the move for administrative simplification the January 1, 2013 date is simply a little bit earlier than the October 1, 2013 date which would require states that are in that process to make an investment for nine months' return on investment in their existing systems to be complying January 1, 2013. Anything that the committee could to do to address that and to help states have some leniency in meeting that date would be appreciated.
Other things that we believe need to be considered -- we would like you to consider is ensuring -- a broad-based group of stakeholders are participating and are well represented in the development in the review of the operating rules.
Additionally, we need to consider that broad-based group of stakeholders were also available for the refinement and updates that go into the rules as we move forward into the future. We do need to make sure we work out the processes as we go through this to ensure that we have a standard process for actually updating those rules and in all that process going forward.
We also need to make sure we consider very carefully the scope of the operating rules. For example, I heardr several responses in today's conversation that have differing levels of scope if you listen to the responses. Some were even considering eligibility timelines for how fast and quickly Medicaid updates for eligibility information. We believe that going to that depth would be expanding these to the scope of what would be in the operating rules and we think that we need to make sure we keep that scope as clear as possible.
We also mention as an example -- somebody mentioned the companion guides. I have heard that several times. As most state Medicaid programs do have companion guides and those companion guides were necessary in order to implement the HIPAA standards or at least for the time were considered necessary. While I think the operating rules can move forward to help reducing the need for companion guides, we want to make sure that we are very careful and that we don't mandate the removal of companion guides at least for the first phase of the implementation. That may be a long-term goal but we want to make sure that we allow some ability for plans or even Medicaid programs to have some exceptions. Standardization is great, but it is not the overall goal. The overall goal is administrative simplification and reduced costs through efficiency. We need to make sure that we consider that as we move forward with implementing these operating rules.
The example that I can use from the HIPAA implementation where we standardized but also didn't exactly help for the efficiency is with the removal of explanation of benefits for health plans. Everybody uses now adjustment reason codes that are standard among the HIPAA transactions while that actually helped and simplified and add administrative things for automated posting, the inability of states to actually report their more details explanation of benefits actually add administrative burden for providers to identify the issue with the claim that is specific to that Medicaid program and to fix that claim and resubmit that claim.
I want to make sure and I think Janet just before me and I like the way she said mentioned and said we need to make sure we set a minimum standard not a maximum standard. I think that is the approach that we should take is to say this is the minimum that we would expect from operating rules, but that we don't reduce the ability for health plans and specifically state Medicaid programs to address unique circumstances to that state and then over time we should see to reduce the number of exceptions that we have in place so that we can move forward with the administrative simplification as we move forward year over year.
With that I want to thank you for the opportunity to address the committee and I am available for any questions. Thank you very much.
DR. WARREN: Randy, we are going to take them at the end of the panel? Are you going to be able to stay on the line?
MR. MILLER: Sure.
DR. WARREN: Okay. Next we have Susanne Powell.
MS. POWELL: Good afternoon. I am Susanne Powell, Director of Government Affairs for Emdeon. Again, in consideration of the late hour I am going to try to abbreviate my comments and really focus on a couple of specific recommendations. You do have our written testimony which speaks to many of the issues that have already been discussed today.
I do want to note though before I go to the recommendations the fact that Emdeon has had extensive experience dealing with operating rules and is really pleased to have announced recently our compliance with CORE Phase II. We certainly had a very positive experience with that and if there are questions about our experience with that, we would be glad to address.
Given the limited time in an effort to try to advance the discussion I do want to focus on two key areas and maybe go a little further than some of the conversations so far. One is really around collaboration and defining a collaboration model. The second one is really around cost and ease of implementation of a set of standards and now a set of operating rules.
First we will talk about collaboration. I think there has been unanimous agreement among all of those that have spoken today that it is critical that there be a level of collaboration and that there be broad stakeholder involvement in the process for developing operating rules and for moving forward and advancing them.
One of the areas that Emdeon in particular is concerned about and I know others have raised it is in thinking about how we move forward with all this is how do we avoid confusion between operating rules, between standards, and how do we work through how those different organizations are going to work together.
One example of that is specifically the process for requesting updates for changes to standards which there is process in place for now and then adding operating rules on top of that.
We recognize it is going to be very important to have a way to make requests but also to think about how those two sets of requests really have impact one another. How does an update to a standard impact an operating rule and vice versa? We recognize the fact that the DSMO is already in place and has a process in place to address those kinds of requests. We would like to acknowledge that and go a step further and actually make the recommendation that the role of DSMO be expanded to coordinate the efforts not only as the standard organization but also of the entities associated with creation of the operating rules. That they work to actually help to work to define that process and really define the interaction between those organizations.
Beyond that, we also want to just address another important point that was made about the DSMO and that is the fact that perhaps that the process that is now available for requesting it may not be widely known. We would certainly support and see an opportunity to more broadly market that to even think about a direct outreach program to make sure that all the entities understand what that request process is particularly now if we look at adding operating rules on top of that and thinking about how that process comes together.
Finally, as we think about all the things that impact the cost of implementing those standards and operating rules, there are lots of different implications and a lot of those have already been discussed, but at a really very basic level one thing that we think would be beneficial to stakeholders as we move forward is at a minimum trying to have a central location, a central repository for all the documents associated with standards and all the documents associated with operating rules so that there is a one-stop shop for accessing that information easily and cost effectively.
Emdeon has had a very good experience with the development of the tools, a website called HIPAA Simplified which makes a number of HIPAA resources available, reference tools available, and we found in doing that that there is a very good response and that folks have gone to that resource very readily. We recommend a similar approach in trying to make the tools that are going to be needed to comply with standards as well as operating rules available in a more central location.
Given also the fact that the DSMO had made reference to a website that already exists, I know that there may be a number of options for creating a single location for that, but given that that already does exist that might be a logical place to begin to look to have that information in a central place.
Again, the goal as we thinking about implementing these things as we think about the amount of work will be required for all of us to comply with the pieces of their outline is trying to make sure that they are delivered as easily and cost effectively as possible.
Thank you very much to the committee for your time today and I would be glad to answer questions later on.
DR. WARREN: Thank you. Don you are next.
MR. BECHTEL: Thank you. I am Don Bechtel. I work with Siemens Medical Solutions where I am a Privacy Officer for their Health Services Division. I am also a chair elect for Workgroup for Electronic Data Interchange, otherwise known as WEDI. I again would like to thank you for the opportunity to present testimony today on operating rules.
WEDI convened a small work group to discuss operating rules through which the following thoughts have been developed. However, we believe considerable discussion and evaluation still needs to occur within the industry due to the varying needs of the different stakeholders.
From our perspective the concept of operating rules needs to be defined in the context of a broader framework that includes standards, business operating rules, and their relationship to certification.
We offer the following. Standards include the definition of transaction technical structures, business use case, data elements, and business rules associated with the data content within the transaction structure. The responsibility of these activities needs to reside with the existing standards development organizations.
Business operating rules would include technical and logistical procedures for any two specific stakeholders to exchange transactions in accordance with their defined standards. The regulations state that is not defined by a standard or its implementation specifications. This might include but is not limited to communication protocols, service level or performance metrics, security interchange procedure and so on. We also heard from George Langdon several more good examples that might be used.
The specific scope of business operating rules needs to be defined and could be assigned by the industry under the auspices of Health and Human Services to specific industry groups for final recommendations. Development of operating rules must be coordinated with the SDOs responsible for the transactions.
Regarding certification, if the Secretary chooses to use certification as a method of compliance documentation, we believe entities selected for this role must be stand-alone that as separate entities from those developing those standards or operating rules under these provisions.
We also have the following concerns. One, the introduction of any new processes or establishment of new organizations to support the implementation of standards cannot lengthen the implementation process. As many of you know WEDI as the SDOs have been working to streamline the adoption of updated standards and the recent health care reform bill has offered a solution that might actually do that with the interim final rulemaking process and our mandatory three-year update cycle. I guess my point on that is we wouldn't want to see that good work again lengthened by adding another process to this is what I was really trying to say.
The second concern is a goal of these new processes and development entities should be to minimize additional costs in order for industry stakeholders to participate, that is, participation fees or the published document purchase fees. Broad industry participation in these entities should be encouraged by minimizing the costs of participation. However, we are also concerned in having to participate in numerous additional entities is in itself costly to the stakeholders.
Third, we also believe that subsequent implementations of operating rules should be aligned such that the standards and operating rules can be accommodated in a single implementation. We understand that the 5010 implementation in operating rules may be disjointed. We hope going forward this doesn't happen. It is costly to the industry to have multiple implementations like this for the same standards.
Fourth, the industry needs to leverage organizations and capabilities already in place today and avoid additional layers of activities that will further extend or contradict the current consensus building processes. Again, the DSMO suggestions that we heard today from George Arges I think described what our thought process was here.
Fifth, the existing SDOs are accountable for the definition and maintenance of technical standards through their existing processes, which serve the purpose of satisfying business use cases between participating health care organizations. Any fragmentation of this process among multiple organizations will result in needless resource/time expenditures, incremental costs and confusion to affected health care organizations.
Sixth, the companion guides could be used to establish the foundation for operating rules. Utilizing a companion guide template, such as the one being developed jointly by WEDI and the ASC X12 will insure uniformity industry-wide and would reduce stakeholder risk of violating copyrights.
Also, I would like to note based on some comments made earlier today that this particular template would not allow for changes to be made to the content or the definition of that content of usage of that content. We are really focusing on things we mentioned earlier in this testimony.
In conclusion, we recommend that HHS take the following actions. One, reaffirm the advisory role of WEDI to HHS under the Health Insurance Portability and Accountability Act. Two, reaffirm the role of current SDOs in the industry and the oversight role already provided by the Designated Standards Maintenance Organization or the DSMO and this committee as well. And third, develop the process that will define the scope of operating rules because stakeholders need a clear understanding of the scope in order to address operational implementations between two stakeholders that are exchanging established transaction standards, and the work of the operating rules cannot as I have mentioned address data content or the rules around content usage. We support the comments that were made earlier today by the SDOs and feel that more frequent updates of the transactions may help the industry bring forward much needed changes in a more predictable way.
WEDI looks forward to the next steps of HHS and NCVHS and offers to provide assistance where appropriate. WEDI, in its advisory role, is ready and willing to provide information as warranted to HHS and NCVHS on these matters. WEDI is also ready to collaborate with the entity or entities identified to develop operating rules to provide the education and outreach arm to the industry. Again, we thank you very much for the opportunity to speak with you today.
DR. WARREN: Thank you. Last guy.
MR. MILLER: Thank you. I am Joe Miller, Director of eBusiness for AmeriHealth Mercy. We focus our efforts on delivering health care to the underserved, but today it is my privilege to represent 30,000 other health care IT professionals who work every day to leverage technology to improve the quality and access and efficiency of health care through an organization called HIMSS. With HIMSS I have been over the last year privileged to work as the chair with HIMSS of the financial system's steering committee which is HIMSS' major group that tries to address topics of administrative simplification, revenue cycle, and those areas.
I won't go through all of my slides in any detail today. HIMSS -- 30,000 individual members, 85 non-for-profit organizations involved with HIMSS, and 450 corporate members, many of those who are presented are vendor community. A lot of people think that health care IT is kind of a recent phenomenon. As you can see, we will be celebration our 50th anniversary this year. I am not sure if that is a good statement or a bad statement and it has taken 50 years to get us to where we are, but in any case we will be celebrating.
A lot of folks when they think about HIMSS think about the work we do on the clinical side that in fact there is a lot of work we do in the administrative transaction side. In 2007 AFEHCT came on board with HIMSS and we formed our financial systems committee. In 2010 the medical banking project came with HIMSS. This rounds out a lot of our organizational focus on administrative simplification.
We do a lot with educational programs in this area and a variety of work groups: 5010, ICD-10 task force. The list of 5010/ICD-10 activities I think covers several different pages and many different projects. A lot of webinars and symposium and of course we are very much collaborators in this space, collaborators with WEDI, with X12, with eNet, and of course CORE.
When we think about HIMSS, we think also that our focus in HIMSS is around a provider community and that is the asset working with providers that we bring to this partnership with NACHA and CORE, the connection to the provider community and I will talk a little bit more about that later.
From our work in the administrative area we focused a lot around the medical banking project. This is an effort that is developed across industry, educational venues, and it is really linked two kinds of groups that you didn't normally think of working together: banking and health care. These are important groups that have come together to look at opportunities particularly opportunities around EFT and ERA. The ERA element is really a key one for us and for this I think community. If I value where the potential for the high value it can deliver to our providers, but also the challenge that it provides in terms of its complexity and how problematic it is to deliver that transaction in a usable form and have providers use it effectively. I think from the North Carolina standpoint 94 percent of claims are submitted electronically, but only 35 percent of the remittances go back. But an interesting juxtaposition there and that is one of those transactions have enormous value for us. This has been a key focus around medical banking project.
Earlier it was also mentioned the work around HITSP and HIMSS is a key role player in the whole HITSP effort and the use of HITSP to develop some -- not quite operating rules but some instructions for how the standards would be used and HITSP was very involved. HIMSS was very involved in that through HITSP. And I think that maybe it's not an exact model or what we are looking at in terms of the operating rules, but there is some parallel there that I think we can certainly learn from not just bringing together the 900 users but around how we take those transactions maybe a little bit to the next steps so that they are a little bit more usable.
And then of course IHE as well. In IHE the group that was focused around and it continues to be focused around IHE and many of you have probably been to HIMSS conference where you see this enormous section of a conference where you have vendors and as an important point vendors demonstrating how these transactions can be effectively used.
One of the key points I think that has -- I am probably echoing some things from some other folks today but there is a penalty I think in the act for a dollar per member if a health plan doesn't comply with the operating rules. The fact is that the last nine yards which is the provider is one of the key elements in this and providers will only look at and implement a transaction if number one it is going to deliver value to them and number two they have a vendor product that will offer that. And vendors will only implement a product with capability. Vendors will only implement a product if they know it is going to have value to the provider, but if it is clear for them of how they implement it -- the last thing a vendor wants is to have confusion over how to implement a particular feature of their product. IHE has provided that opportunity for vendors to work together to share collaboratively information to prove and then work out issues so that they can make these transactions work together. I think it also provides a nice parallel model potentially for operating rules.
What else is HIMSS doing? Of course many of you know HIMSS as an educational organization delivering great education through our annual conference, virtual conference, e-learning academies and so forth. You can see all the things that we do here, but I would emphasize too that this slide does not even show all the educational activities that occur through HIMSS through our 48 chapters and communities that are out there. I have spoken at many of these around administrative transactions and in fact when you think about health care and you think administrative transactions, you have to think there is a lot of localness for this, local plans, local clearinghouses as well as local providers who are trying to look for ways and find ways to share information effectively and those chapters do a great job around that type of education.
What are some of the success factors? Certainly a neutral platform where we can collaborate together is key to align a value proposition across all the stakeholders. We will certainly going to support that effort with NACHA and with CAQH CORE.
The second area of key success factors we believe is education. Education is a requirement for adoption widespread adoption. We will utilize all the HIMSS resources that we can in this effort to deliver the education that is required to the provider community our focus as well as to the vendor community where appropriate to support the initiative.
Third, membership support -- strong volunteers. We talked about that today. We need to broaden out the community of volunteers who work around operating rules as well as standards, and we have a lot of communities within HIMSS who can contribute to some of that support.
And then last I would just say that we need to recognize that there are competing priorities particularly in the provider community. There is meaningful use, ICD-10, and 5010 as we well know. One of the things that I think we have help with is to help our stakeholders develop strategies that look at the synergies between all of these efforts as opposed to each of them being a disparate or stand-alone type of item.
I think we also have to recognize and you can't quite see it on this slide that we have business change going on today. Accountable care organizations, medical homes. Even health information exchanges or health plan exchanges are new models of doing business in our community and to be responsive to those models we are going to need to see change in how we deliver some of these transactions in the future. A real key here again is going to be the operational rules, flexibility and the ability to deliver those to respond to these new business requirements that we probably haven't even imagined how they are actually going to play out over the next three to five years.
Thank you for your time today. I will be glad to take any questions.
DR. WARREN: Questions? Margret, you have been real quiet. Do you need any clarification or questions?
MS. AMATAYAKUL: No.
DR. WARREN: Michael.
DR. FITZMAURICE: Janet Jackson. You said with implementation of operating rules training partners are not dependent upon individual health plans' companion guides to give them the information they need on what connectivity or security protocol to use or to map information differently for each health plan. Do I read into this that you are saying that pretty much opinion guides are not needed if the operating rules will supply that information?
MS. JACKSON: I will not go on record as saying the companion guides are not needed -- get fired when I got back --
DR. FITZMAURICE: We wouldn't want that.
MS. JACKSON: I do think that it certainly simplified especially the connectivity methods. It has helped our providers and clearinghouses and software vendors tremendously that we have one connectivity method for our real-time eligibility transactions. It has simplified that for them.
DR. FITZMAURICE: Fair enough. Don Bechtel, in your testimony on page three at the top about existing SDOs are accountable for the definition and maintenance of the standards, et cetera. Any fragmentation of this process the kind of standards process among multiple organizations will result in needless resource/time expenditures, incremental costs and confusion. Do I read that to mean that the operating rule entity could be an ANSI accredited standard developing organization to reduce resource use and to reduce confusion and to keep coherence in the standards process or is that not what you meant?
DR. BECHTEL: That is not exactly what I meant? Yes, I think in part that is what we are talking about. I think the statement that is being made in that point is we can't have more than one organization defining how the use of a standard is to be employed where it is defined in one place and then redefined somewhere else. If we have multitude entities besides two that becomes even more fragmented and more confusing. When it comes to implementation, which one do I follow? The one from the primary standards organization, the one from one of these other entities. We don't think that is what the industry needs. We think we need to have very clear concise direct rules that help us know how to do this. In part they come from the standard. In part they come from the implementation specification accompanies that standard and then part of it comes from operating rules, but they can't contradict each other. We can't have them defining the same thing as far as trying to get there.
DR. FITZMAURICE: The second paragraph, the bullets underneath that. Companion guides established a foundation for operating rules. Could I say that operating rules are simply companion guides with blanks to be filled by a profile of an organization?
MR. BECHTEL: That might be part of it. Yes. I think there are more things than we might traditionally find in a companion guide today that could be found in a companion guide if we include operating rules, but I think the companion guide template that WEDI is working on in conjunction with X12 establishes a framework for which those guides are written and sets the rules for how those guides should be developed so that we are not running into contradictions and we are not doing the things that either organization, the operating rule organization or the standards organization want to abuse.
DR. FITZMAURICE: Thank you Don. Joe Miller, does HIMSS have a position on companion guides? Should they be kept or should they be folded into operating rules and eliminated? Does HIMSS have a position on whether this operating rule entity should be an ANSI-accredited organization or not that is consensus process and all that goes with it? Thirdly, an opinion on whether clearinghouses can continue to fill the gap between providers, HIPAA standards and maybe operating rules and payers or should business software be certified somewhat like electronic health records might be certified.
MR. MILLER: HIMSS does not have a position to my knowledge on any of those or an official position on any of those topics.
DR. FITZMAURICE: Fair enough. I think you are off the hook for now.
DR. WARREN: Marjorie.
MS. GREENBERG: Thank you to all of you and everybody today for your testimony. Susanne, I was just seeking a clarification and I probably have your testimony here. It might have been in yesterday's testimony. I think I left that at home. If you could clarify. The role that you are proposing for the DSMO is as a coordinator of operating rules or were you actually recommending that they should be the single entity responsible for operating rules.
MS. POWELL: No, I was simply suggesting that there is already a process in place. It was in the context of talking about the process or requesting updates and since the DSMO is currently playing that role, we recommended that that role be expanded to include not only the standards organizations but also the operating rules' creators so that there would be one process that would address updates to both types of organizations knowing that there needs to be close connection between how those flow together.
MS. GREENBERG: So whatever entity or entities are responsible for the operating rules should actually serve on the DSMO.
MS. POWELL: We believe -- this is a new idea so we have not discussed it in detail, but I think there could be an opportunity or it is worth looking at them under the DSMO in the same way that the standards organizations currently do.
MS. GREENBERG: One thing that was a little unclear to me and I guess it was from several different -- there seems to be an enormous amount of agreement that I heard today, but it seems that everybody agrees that you shouldn't have more than one entity coming up with operating rules for any given transaction if you didn't hear any support through competing operating rules. What a nightmare. It seems that if you stuck to that principle and you had some organization coordinating all the operating rules, I am not quite sure what the downside is to having some distributive approach to developing the operating rules if that is a way to get the right people working on the right rules. I don't know if any of you have any thoughts about that.
MR. BECHTEL: Not to preempt anyone, but yes. I think I was speaking to that in my comments as well. I think having multiple entities even if we had one per standard or transaction becomes problematic and the reason I believe that becomes problematic is how many of these organizations can we participate in. They are going to have meetings at different times. It is people going to those meetings or even dialing in. Cost of publications. Now I probably have another publication I am going to have to purchase instead of maybe just one for all the standards of an operating rule. It just raises the cost of participation. I think it is going to actually drive down participation if we have too many of these. I think there is significant concern there.
MS. GREENBERG: The operating rules as I understand it most people at least I don't know if anybody recommended it otherwise would be incorporated into the appropriate implementation guide.
MR. BECHTEL: Not necessarily.
MS. GREENBERG: I actually thought I heard several people suggest that. If that was a suggestion -- so then you would -- but you could have that in alternate ways -- purchase them from different people.
MS. DOO: Thank you all again. Joe, this is a question for you since you are the voice of the provider in many ways. Back to my beating on the drum question this morning, how would you then engage providers in all of this process so that they really are at the table?
MR. MILLER: I think that there is not an easy to that, but I do think that the more that we can move the discussion from a technical perspective to a discussion around the value proposition that providers can benefit from with respect to these operating rules and the more we are going to be able to attract them into that conversation and to put the resources into it. Let's make it more practical to them. I think we have an opportunity to do that with operating rules maybe a little bit more than we have to standards and standards are enormously important. They -- technical and cover the whole nine yards of what could happen in many possible situations and God bless the people who -- that problem. I think the operating rules could have a little bit more of an opportunity to look at the value proposition and that may create some more interesting --
DR. WARREN: Walter, last words.
DR. SUAREZ: Thank you very much for the testimony. I am coming out with a number of thoughts about this of course that are trying -- I think after all the discussions and all the perspectives are considered it is going to be very important to make sure that the operating rules as we see it continue the path of administrative efficiency as I like that term -- administrative simplification.
I think we have heard a number of areas where operating rules can help and I clearly see their role in a number of places. I have worked on companion guides. I have worked on areas to try to help expand the simplification that the standards under HIPAA provide and they are in a number of areas.
My perspective and this is what I wanted to test with this particular panel is my perspective is we can constrain for the first round the areas of where operating rules should focus on to the following fact. The first is performance and that includes system performance, system availability, and those kinds of things.
The second one is connectivity and transport. It has been said time and again that one of the benefits is ensuring that we all agree on a way of implementing the connectivity and the transport. The third is security and authentication and all the things related to there.
The fourth one is now getting into some of the specifics where the first round of operating rules, the eligibility in particular is that disentangling the various scenarios for eligibility queries and the responses that we get and then this is not the inquiry respond in it 270/271 situation but the scenario that we talked about before on the policy holder or I am the patient or I am the beneficiary and dependent and then the patient -- what to respond and those kinds of situations which significantly benefit from having some standardization. That is the fourth area.
The fifth area is on some of the things that are containing companion guides such as the definition of some of the elements that occur in implementation guides don't provide enough direction or definition. And more and more those areas are becoming a lot limited reduced because 4010 provide a lot of flexibility and now 5010 is very tight and probably 6030 will be even more so.
One area that I think we have to and I want to be very pointed to that and that is a question to the panel too is one area that we have to be very careful about is data content. It has been said several times and one of the benefits because of the lack of a current transaction providing that information that the CAQH score provides additional data content that everybody lost that because providers now have more information to determine the eligibility of patients and how much they are going to be paid on those things or expect to be paid.
If we jump into that area now we are risking the process of defining the content standard from what it has been in the past. The content is defined by the standard of the organization. Why isn't that -- the content is brought to the standard of development organizations be incorporating into the transaction rather than creating another level of standard of data content.
I wanted to test if those are the five areas or are there any other areas in which you see concrete value of an operating rule and trying to constrain the purpose and the focus of operating rules. That is number one.
Number two, data content should not be really part of an operating rule process. That is the second element. That is it.
MR. BECHTEL: I concur.
DR. SUAREZ: That is easy.
MR. BECHTEL: Yes.
MR. JOE MILLER: There were some examples given today and I don't have my guide with me here to know what is in the standard versus what might be under CORE Operating Rules. One example was given that a health plan should return primary care provider's name and information potentially if one does exist the persons under the plan. That certainly seems like a good thing for health plan to do and maybe that is something that standard might not cover and maybe it does that it is required if it is there, but there may be other instances that we discover as we try to drive the value proposition that we say let's try that as an operating rule and if it is incorporated into the standard at some point, but that is where -- I think that I wouldn't want to see us not look at those opportunities I guess.
DR. SUAREZ: It is a great point that you bring up because if I am today following the law, I would be prohibited from sending anything above and beyond 271 or not.
MS. DOO: Not if it is situational.
DR. SUAREZ: It isn't included in the standards.
MS. JACKSON: 4010 allows you the capability to say yes they are covered or no they are not. You can return that minimum of a -- does it provide -- business need. No, it doesn't. I think that is the -- health plan can meet the letter of the law by saying yes they are covered. No, they are not.
DR. SUAREZ: Absolutely. I am saying if we want to know the color of the eyes of the primary care providers which is not a data element in the current data content standard for 271 and I send it, where do I put it in the 271 or if I am replying using a non-271 transaction structure but a web based, I still have to comply with the data content component of the 271 which doesn't show we were to put the color of the eye of a primary care provider. In that sense we are certainly constrained to some extent or great extent of this data set that we need to use in the data set defining the standards. If we want to add to it or send, we will have to send something else or supplement that with some other place. If we open the door to those kind of expansions of data and provide those as operating rules, what are the risks of doing that and certainly what are the values of doing that?
MR. JOE MILLER: Continuing your example, there is a service code in the transaction. We are not saying throw the service code out, but to the degree that it requires a health plan to deliver the more specific service code if one is available of the series of service codes. That is a good thing for our provider. A provider has a better idea about what is in fact covered as opposed to sending the 30 code which is the generic the other covered by the plan. Are they covered for emergency visits or vision or pharmacy or so forth? I think that is a great opportunity for an operating rule to try to enrich the transaction and ensure that the information expectations on the part of the provider are met consistently by all health plans as opposed to the provider wondering maybe this one is sending it and maybe that one is not.
DR. WARREN: I am going to step in. We are late almost five minutes ago so not too bad. I want to thank everybody for what they have done. What I would like to ask people to do is think about Walter's comments so that as we have discussion tomorrow about operating rules and we will give you a chance to process because I think we are all getting just a little overloaded at least I am today. I think those are good questions as we start looking at operating rules tomorrow.
I want to close with two items. One, today we had a hallmark activity that showed the absolute successful implementation standards. It is called Facebook now. It has 500 million members. Build it and they will come -- put that as a goal for our standards.
This is another unique day and I have had several comments on it and want me to share it with the group, so I would like for you all to help me wish Walter a happy birthday. We are now adjourned.
(Whereupon, at 5:20 pm, the meeting was adjourned.)