HHS to Standardize Medical E-Transactions

WASHINGTON (08/21/2000) - The U.S. Department of Health and Human Services issued a regulation last week that will standardize - and encourage - electronic health care transactions, saving billions of dollars in the long term.

The regulation, released Aug. 17 in the Federal Register, affects federal and private health care programs such as Medicare and Medicaid by requiring the use of standard formats and standard procedure codes whenever medical claims are processed electronically.

Health insurers currently require health providers to use many different paper and electronic forms to file claims.

Providers will still be able to use paper forms, but HHS expects that the new electronic standards will encourage more electronic filing, saving the health care industry US$29.9 billion in 10 years, according to the department.

However, there may be some "short-term pain" and initial "significant cost" for companies that transmit and process electronic claims that do not comply with the new national standard, said Mark Leavitt, chairman of Medica-Logic/Medscape Inc., which provides systems to manage clinical records.

MedicaLogic/Medscape is not directly affected because the regulation applies to administrative claims, not clinical records, Leavitt said. But he said he does expect some concrete benefits. "I think it's a precursor to more" standardization and more requirements to "submit things in digital format whether they're claims or clinical records," he said. The move should also "facilitate the development of software or applications that work more broadly," he said. "That always makes them less expensive." The regulation was mandated under the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

The regulation also includes these provisions:

-- Health plans will be able to pay providers, authorize services, certify referrals and coordinate benefits using a standard electronic format for each transaction.

-- Providers will be able to use a standard format to determine eligibility for insurance coverage, inquire about claim status, request authorizations for services and receive electronic remittance to post receivables.

-- Employers that provide health insurance to their workers will be able to use a standard electronic format to enroll or unenroll employees and to submit premium payments to any health plan for which they have a contract.

An HHS spokesman made no one available to comment on the regulation. But HHS Secretary Donna Shalala said in a statement that the rule is being released under the assumption that privacy protections will be in place at about the same time the rule takes effect in October 2002.

HHS said it expects to release a final rule pertaining to the privacy of medical records later this year.

Last month, before an HHS advisory committee, Donald Bechtel, strategic adviser for Healthcare Data Exchange Corp. and Shared Medical Systems Corp., both subsidiaries of Siemens Corp., said the companies have implemented several transactions required by HIPAA.

"The bottom line is: These transactions work, they're efficient, they reduce the cost of these business transactions, they reduce errors in data and free people to do other important work," he testified. "Providers will be positively affected in terms of return on investment because of the standard transaction formats and the efficiencies they make possible."

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