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

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Presentation on theme: "HIPAA 201: EDI An Introduction to the HIPAA Electronic Data Interchange (EDI) Regulations For audio dial: 1-800-749-9918."— Presentation transcript:

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

2 First Consulting Group 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

3 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

4 Purposes of Administrative Simplification

5 First Consulting Group 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

6 First Consulting Group 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

7 First Consulting Group 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

8 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

9 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

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

11 First Consulting Group 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

12 First Consulting Group 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

13 First Consulting Group 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

14 First Consulting Group 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

15 First Consulting Group 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

16 First Consulting Group 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

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

18 First Consulting Group Proposed Standard Identifiers ♦ Employer Identification Number (EIN) –Format: (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

19 First Consulting Group 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

20 First Consulting Group 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

21 First Consulting Group 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

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

23 First Consulting Group 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

24 First Consulting Group HIPAA Medical Code Sets ICD-9-CM, Volumes 1 & 2: ICD-9-CM, Volume 3: CPT-4: Coding for diseases, injuries, impairments, causes of injury, other health problems Coding for prevention, diagnosis, treatment, management of hospital inpatients Coding for professional services, clinical lab tests, diagnostic procedures, hearing and vision services

25 First Consulting Group HIPAA Medical Code Sets (cont’d) HCPCS: NDC: CDT-3: Coding for medical equipment and supplies as well as injectable drugs Coding for drugs and biologics (replaces “J” codes)* 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

26 First Consulting Group HIPAA Non-Medical Code Sets ♦ 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 Codes valid at the time the transaction is initiated

27 First Consulting Group 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

28 First Consulting Group 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

29 Transaction Sets Introduction Implementation Guides Transaction Sets Pharmacy Claims

30 First Consulting Group 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

31 First Consulting Group 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

32 First Consulting Group 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)

33 First Consulting Group Standard Transaction Types Type Purpose 837Claim submission, 3 types: Institutional, Professional, and Dental 835Claim payment remittance 276/277Claim status inquiry/response 278Authorization/referral 834Enrollment 270/271Eligibility inquiry/response 820Premium payment

34 First Consulting Group Transaction between Providers and Health Plans ProvidersHealth PlansTransaction Sets Accounts ReceivableAccounts Payable Claim Status Inquiries Adjudication Service Billing / Claim Submission Claim Acceptance Pretreatment, Authorization, and Referrals Pre-certification / Adjudication Eligibility VerificationEnrollment 270/ /

35 First Consulting Group 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

36 First Consulting Group 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

37 First Consulting Group 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

38 First Consulting Group 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

39 First Consulting Group 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

40 First Consulting Group 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

41 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

42 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

43 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

44 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

45 First Consulting Group 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

46 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

47 First Consulting Group 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

48 First Consulting Group 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

49 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

50 First Consulting Group 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

51 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

52 First Consulting Group 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

53 Next Steps

54 First Consulting Group 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

55 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

56 First Consulting Group Industry Collaboration ♦ WEDI - Workgroup for Electronic Data Interchange: ♦ SNIP - Strategic National Implementation Process: –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

57 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 to request changes

58 Questions and Discussion Press 1 on your touch tone phone for questions.

59 First Consulting Group Resources list.htm Subscribe to release of HIPAA documents (such as notice of proposed rule making) edi.htm Links to federal HIPAA sites Transaction Implementation Guides from the Washington Publishing Company the Record: Protecting Electronic Health Information (National Academy Press, 1997) –Full Report m Department of Health and Human Services HIPAA Administrative Simplification: –Latest News on Regulations –Current proposed and final rules Patient Record Institute (CPRI): –CPRI Security Toolkit Health Information Management Association (AHIMA): –Benchmark information and case studies –Interim Steps for Getting Started


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