HIPAA 201: EDI An Introduction to the HIPAA Electronic Data Interchange (EDI) Regulations For audio dial: 1-800-749-9918

Presentation Agenda ♦ Administrative Simplification Provisions ♦ Benefits of EDI ♦ EDI Key Business and IT Impacts – Standard Identifiers – Code Sets – Transaction Sets Introduction – Transaction Sets ♦ Next Steps – Internal – External – Communication First Consulting Group

Presentation Objectives At the end of this presentation, you should: ♦ Understand why the EDI standards were

developed

♦ Understand each of the specific EDI standards

and their impact on the organization

♦ Be able to determine your own organizational

strategies and next steps for tackling HIPAA EDI requirements

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Purposes of Administrative Simplification

Purposes of Administrative Simplification ♦ To improve the efficiency and effectiveness

of the health care system by standardizing the electronic transmission of certain administrative and financial transactions and protect the security and privacy of transmitted information.

♦ Over 400 formats of EDI are used in the US

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Intent of the Transaction and Code Set Rule ♦ To encourage electronic commerce in

health care

♦ To simplify administrative processes ♦ To decrease the administrative costs of

health care

♦ To eliminate software adaptation for

multiple formats

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Benefits of EDI ♦ Reduction in manual data entry and processing ♦ Elimination of cost and delays of postal service ♦ Improved data comparability ♦ Elimination of disparate forms and codes ♦ Improved cash flow ♦ Improved accuracy of information ♦ Fewer claims rejections First Consulting Group

Benefits of EDI (cont’d) ♦ Cost savings (including reduced labor costs) ♦ Fewer billing errors ♦ Improved accuracy, reliability and usefulness

of shared information

♦ Improved customer service ♦ Prevent inadvertent errors that could lead to

allegations of fraud and abuse

♦ Minimized risk of penalties First Consulting Group

Covered Entities ♦ Health plans ♦ Health care clearinghouses – services that

translate information between organizations

♦ Health care providers who transmit any

health information in electronic form in connection with a covered transaction

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Non-Covered Entities ♦ Workers’ Compensation Programs ♦ Property and Casualty Programs ♦ Disability Insurance Programs ♦ Nursing Home Fixed Indemnity Policies ♦ Prisons

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Requirements of Health Plans ♦ Must accept and process standard transactions

from any person in the same time frame in which they processed transactions prior to the implementation of the HIPAA standard

♦ May not offer an incentive to conduct a

transaction as a non-standard transaction

♦ Must be able to process earlier versions of

code sets

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Requirements of Health Plans (cont’d) ♦ Must keep code sets for current billing period

and appeals periods still open to processing under terms of the plan’s coverage

♦ MAY use a clearinghouse to translate

transactions that are not in standard format

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Requirements of Clearinghouses ♦ A provider submitting standard transactions

through a clearinghouse must not be adversely affected financially by doing so

♦ The cost of submission to a clearinghouse

cannot exceed the cost of direct transmission to the health plan

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Requirements of Providers ♦ Must use standard transactions if conducted

electronically

♦ MAY continue to use paper media ♦ MAY use a business associate to conduct a

transaction

♦ MAY use a clearinghouse to translate non-

standard transactions

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Key EDI Impacts ♦ All trading partner agreements that stipulate

data content format definitions or conditions that do not comply to the ANSI X12 standards are no longer valid agreements and will need to be modified

♦ The standardization of data elements and the

values in the data elements will eliminate proprietary codes

♦ The HIPAA standards are not required on

paper transactions, but can be used on paper to prevent dual system maintenance

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Key EDI Impacts (cont’d) ♦ For on-line interactions between a server and a

browser, data content must comply with the HIPAA X12 standards, but not the data format

♦ Transmissions within a corporate entity would

not be required to comply with the standards unless it is sending electronic data from a provider portion to a health plan portion

♦ Case management is considered a health care

service

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Standard Identifiers HIPAA Proposed Standard Identifiers Potential Key Impacts – Standard Identifiers

Proposed Standard Identifiers ♦ Employer Identification Number (EIN) – Format: 00-0000000 (9 digit) – Final Rule expected anytime

♦ National Provider Identifier (NPI) – Format: 10 digit – Final Rule expected anytime – Note: This number will be randomly assigned and not tied to processing logic

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Proposed Standard Identifiers (cont’d) ♦ National Plan Identifier (PlanID) – Format: 10 digit – Notice of Proposed Rule Making expected anytime

♦ Individual – Format – On hold due to privacy concerns

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Potential Key Impacts: Standard Identifiers ♦ Business processes related to issuance of

new identification cards will be impacted

♦ Identify field availability, field format and

field length of HIPAA identifier fields in existing IT applications ♦ Choose to “crosswalk” old and new identifiers

or migrate to new identifiers and use throughout systems

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Potential Key Impacts: Standard Identifiers (cont’d) ♦ Produce and maintain new business

directories tables to include mapping to older identification numbers

♦ Provide education to familiarize providers

with new identification numbers and formats for data transmission

♦ Business process related to handling of paper

(no standard ID required) and electronic (standard ID required)

♦ Dual processes may be required First Consulting Group

Code Sets What is a Code Set? HIPAA Code Sets Key HIPAA Impacts - Code Sets Key IT and Business Impacts Code Sets

What is a Code Set? ♦ Any set of codes used to encode data

elements, such as tables of terms, medical concepts, medical diagnostic codes or medical procedures

♦ Includes codes and descriptors ♦ Includes modifiers ♦ For ICD-9-CM, it includes the Official

Guidelines for Coding & Reporting

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HIPAA Medical Code Sets ICD-9-CM, Volumes 1 & 2:

Coding for diseases, injuries, impairments, causes of injury, other health problems

ICD-9-CM, Volume 3:

Coding for prevention, diagnosis, treatment, management of hospital inpatients

CPT-4:

Coding for professional services, clinical lab tests, diagnostic procedures, hearing and vision services

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HIPAA Medical Code Sets (cont’d) HCPCS:

Coding for medical equipment and supplies as well as injectable drugs

NDC:

Coding for drugs and biologics (replaces “J” codes)*

CDT-3:

Coding for dental services (replaces “D” codes)

These Code Sets do away with all local codes. * An Notice of Proposed Rule Making will be released to remove NDC Code requirements First Consulting Group

HIPAA Non-Medical Code Sets Codes valid at the time the transaction is initiated ♦ Claim Status Reason Codes ♦ Claim Adjustment Reason Codes ♦ Codes used in the Implementation Guides,

such as: – – – – – –

UB92 Revenue Codes Value Codes Condition Codes Place of Service Codes Type of Service Codes Provider Taxonomy Codes

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Key HIPAA Impacts: Code Sets ♦ Will capture data elements not currently captured ♦ Adjustment reason codes and claim status

codes will change

♦ Work to eliminate all proprietary codes – may

mean requesting new standard codes

♦ Future claim submissions may require code

plus modifier for services

♦ Number of diagnosis codes allowed on a

submission will increase from 4 to 8 with 4 pointers per diagnosis for each service line on the claim

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Key IT and Business Impacts: Code Sets ♦ Identification of all proprietary codes to

determine their applicability

♦ Require mapping of proprietary codes to

HIPAA code sets

♦ Develop plan on how to handle elimination of

proprietary codes

♦ Require providers to insure vendors plan to

include all HIPAA modifiers and applicable codes in new software releases

♦ Require an update to policies and procedures First Consulting Group

Transaction Sets Introduction Implementation Guides Transaction Sets Pharmacy Claims

Implementation Guides ♦ Implementation Guides include: – Data elements required or conditionally required – Definition of each data element – Technical transaction formats for the transmission of the data – Code sets or values that can appear in selected data elements

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Downloading Implementation Guides ♦ Where to download Implementation Guides: – www.wpc-edi.com – www.ncpdp.org

♦ Implementation Guides are in PDF format ♦ X12N Implementation Guide downloads are

free

♦ NCPDP Implementation Guides require a fee

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Pharmacy Claims National Council for Prescription Drug Programs ♦ The final standards for electronic health care

transactions, and for code sets, adopt the NCPDP Telecommunication Standard Format, Version 5.1 and the NCPDP Batch Standard, Version 1 Release 0 for pharmacy claims

♦ Health plans, health care clearinghouses and health

care providers who utilize electronic transactions will be required to use these standards beginning October 2002

♦ Application for an extension until October 2003

available from the DHHS website (due Oct 2002)

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Standard Transaction Types Type

Purpose

270/271

Eligibility inquiry/response

278

Authorization/referral

837

Claim submission, 3 types: Institutional, Professional, and Dental

276/277

Claim status inquiry/response

835

Claim payment remittance

834

Enrollment

820

Premium payment

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Transaction between Providers and Health Plans Providers Eligibility Verification Pretreatment, Authorization, and Referrals Service Billing / Claim Submission Claim Status Inquiries Accounts Receivable First Consulting Group

Transaction Sets 270/271

Health Plans Enrollment

278

Pre-certification / Adjudication

837

Claim Acceptance

276/277

835

Adjudication

Accounts Payable

270/271:Eligibility Transaction ♦ 270 Eligibility Inquiry - A request sent by a

provider for determination of eligibility

♦ 271 Eligibility Response - An information

source that responds to the request with either an acknowledgement that the patient has active or inactive coverage, or that the patient was not found within their system

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Business Considerations: 270/271 Transaction ♦ Requires a revision in eligibility policies and

procedures

♦ Requires a change in how eligibility information

is received, stored, and transmitted

♦ Requires a change in how eligibility information

is interpreted

♦ Will result in fewer telephone calls ♦ Includes both batch and real-time bi-directional

EDI transactions

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278: Health Care Services Review Transaction ♦ 278 – Pre-certification/Authorization/Referrals ♦ The 278 is the only transaction that has both

request and response within the same Implementation Guide

♦ The 278 is used to request that a utilization

management organization review a proposed or actual procedure or admission and provide approval or authorization of that service

♦ Although not mandated within the transaction,

the 278 should be used for one patient for one service

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Business Considerations: 278 Health Care Services Review ♦ Transaction will effect Medicare and

Medicaid work flow

♦ Requires a change to operating procedures

and policies relating to timeliness of referral and response ♦ Medicare and Medicaid will establish and

direct operating protocols

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837: Institutional, Professional, Dental Claims ♦ Used to submit health care claim billing

information, encounter information, or both from providers of health care services to payers, either directly or via intermediary billing agencies and clearinghouses

♦ It can also be used to transmit health care

claims and billing information between payers with different payment responsibilities where coordination of benefits is required or between payers and regulatory agencies to monitor the provision, billing and payment for health care services

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837: Institutional, Professional, Dental Claims (cont’d) ♦ Implementation Guides have no recommended

limit to the number of claims transaction submissions within one ISA-IEA (outer envelope) transmission

♦ For translation processing, it is recommended

to limit the number of claims per transmission

♦ When a provider submits the complete data

set of claims information, the health plan cannot request the data at a later date First Consulting Group

IT and Business Considerations: 837 Transaction ♦ Requires education on new electronic claims

format

♦ Requires a change to policies and procedures ♦ Eliminates all proprietary codes not contained

within the transaction

♦ Involves mapping of existing claims transaction

formats such as NSF, UB92, and HCFA 1500 to the 837 X12N Implementation Guides First Consulting Group

IT and Business Considerations: 837 Transaction (cont’d) ♦ Requires a change in how claim information

is entered and processed

♦ Requires a change to reason codes used today ♦ Contains additional required data fields that

current claims transactions do not include

♦ A uni-directional, batch EDI transaction set First Consulting Group

835: Remittance Transaction ♦ Remittance information is provided as

justification for the payment received by the 837 transaction, as well as input to the provider’s accounts receivable system

♦ Remittance information consists of two

separate levels

– Level 1 - consists of claim and service information packaged with detail information – Level 2 - consists of remittance information that is not specific to claims and services contained in Level 1; this information relates to the Provider Adjustment Segment which provides for reporting increases and decreases in the amount remitted First Consulting Group

835: Remittance Transaction (cont’d) ♦ The transmission of any of the following from

a health plan to a health care provider’s financial institution: – Payment – Information about the transfer of funds – Payment processing information

♦ The transmission of either of the following

from a health plan to a health care provider: – Explanation of benefits – Remittance advice

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IT and Business Considerations: 835 Transaction ♦ Requires a change in policies regarding

financial transaction processing

♦ Requires review of electronic funds transfer

(EFT) procedures as the 835 allows direct EFT

♦ Review of workflow process to ensure that all

processes are documented

♦ Contains additional required data fields that

current claims transactions do not include

♦ A uni-directional batch EDI transaction set First Consulting Group

276/277: Claim Status Transaction ♦ The 276 Claim Status Request is the inquiry

from the provider to the health plan regarding the status of a specified claim(s)

♦ Status information can be requested at the

claim or line level

♦ The 277 Claim Status Response is the reply

from the health plan to the provider on the status of the claim(s) within the adjudication process

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Business Considerations: 276/277 Transaction ♦ Change business structure in how requests

for claims information are processed

♦ Develop data file to capture and retain claims

information for specified periods of time

♦ Upgrade claims data to capture requirements

in 276/277 to provide comprehensive information

♦ Both batch EDI and real-time, bi-directional

transactions

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834: Enrollment / Disenrollment Transaction ♦ One of two transactions not processed by the

provider; NOT required since employers/ sponsors are not covered entities

♦ The 834 transaction was developed for transfer

of enrollment information from a sponsor of insurance coverage, benefits, or policy to a payer

♦ The 834 deals with three types of transactions: – Initial enrollment – Changes to enrollment benefit information – Reconciliation to ensure accuracy of data First Consulting Group

Business Considerations: 834 Transaction ♦ Enrollment process must be reviewed to

ensure all transaction data is available

♦ Requires a change in policies and procedures ♦ Status inquiries must be enhanced to handle

an automated process

♦ EDI agreements must be reviewed

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820: Premium Payment Transaction ♦ The 820 transaction is not required since

employer/sponsor is not a covered entity; 820 is sent from employer/sponsor to payer

♦ Used to initiate an electronic payment that

includes the remittance detail needed by the receiver to properly apply the payment

♦ Payment can be initiated without the remittance

detail, and send the remittance detail separately to the plan

♦ Payment can be made electronically or by paper First Consulting Group

Covered Transactions: Standards Not Yet Determined ♦ First report of injury – Workers’ Compensation ♦ Health claims attachments – following

electronic claims with paper attachments does not make sense

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Planning for Implementation ♦ Strategic approach ♦ Enhance EDI capabilities to realize savings ♦ Recognize data and information as an asset ♦ Identify HIPAA as an opportunity ♦ Map HIPAA compliance to the organization’s

strategic plan

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Next Steps

Next Steps ♦ Educate your staff ♦ Define an organizational EDI strategy and

determine which transactions you want to process electronically using the standard formats

♦ Conduct a comprehensive analysis – Evaluate transactions and code sets currently in use – Identify information systems and feeder systems – Identify and begin discussions with trading partners and vendors – Review contracts – Identify process changes necessary First Consulting Group

Next Steps (cont’d) ♦ Select implementation recommendations

based on alternatives identified during the analysis

♦ Develop transition and conversion plans ♦ Establish a training plan ♦ Establish monitoring and reporting

mechanisms

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Industry Collaboration ♦ WEDI - Workgroup for Electronic Data

Interchange: www.wedi.org ♦ SNIP - Strategic National Implementation Process: www.wedi.org/snip – SNIP is a collaborative health care industry-wide process resulting in the implementation of standards and furthering the development and implementation of future standards – Many white papers available, written by industry collaborative effort: ! Direct Data Entry (DDE) ! Coordination of Benefits (COB) ! Testing and certification First Consulting Group

Requesting Changes to Standards ♦ Requesting Changes to the HIPAA X12N or

NCPDP Implementation Guides:

– HHS named consortium consisting of X12N, NCPDP, HL7, NUBC, NUCC, ADA – Consortium is the Designated Standards Maintenance Organizations (DSMO) – December 2000 – current: approximately 300 changes requested

♦ Go to www.hipaa-dmso.org to request changes

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Questions and Discussion

Press 1 on your touch tone phone for questions.

Resources American Health Information Management Association (AHIMA):

http://www.ahima.org/hipaa.html

–Benchmark information and case studies –Interim Steps for Getting Started

Computer-Based Patient Record Institute (CPRI):

http://www.cpri-host.org

–CPRI Security Toolkit

Department of Health and Human Services HIPAA Administrative Simplification:

http://aspe.hhs.gov/admnsimp/index.ht m

–Latest News on Regulations –Current proposed and final rules

For the Record: Protecting Electronic Health http://www.nap.edu Information (National Academy Press, 1997) 800-6246242 –Full Report

HIPAA Transaction Implementation Guides from the Washington Publishing Company

http://www.wpc-edi.com

Links to federal HIPAA sites

http://www.hcfa.gov/medicare/edi/hipaa edi.htm

Subscribe to email release of HIPAA documents (such as notice of proposed rule making)

http://www.hcfa.gov/medicare/edi/admn list.htm

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