Introduction to HIPAA Electronic Transaction Standards for All Electronic Submitters, Vendors, Clearinghouses & Billing Services
In 1996, Congress passed the Health Insurance Portability and Accountability Act (HIPAA). This Act is comprised of two major legislative actions: Health Insurance Reform and Administrative Simplification. The Administrative Simplification provisions of HIPAA direct the federal government to adopt national electronic standards for automated transfer of certain health care data between health care payers, plans, and providers. This will enable the entire health care industry to communicate electronic data using a single set of standards, thus eliminating all nonstandard formats currently in use. Once these standards are in place, a health care provider will be able to submit a standard transaction for claims, patient eligibility and claim status inquiries and will also receive a single standard transaction for Electronic Remittance Advice (ERA), claim status responses and patient eligibility responses. These standard transactions will use the same standard data content for transmission and/or receipt from any health plan.

The Transaction Final Rule was the first of the Administrative Simplification requirements to be published in the Federal Register. It was published on August 17, 2000, and requires providers who submit electronic transactions to use applicable standards for transactions such as:

• Submitting claims
• Receiving remittance advice statements
• Coordination of Benefits (COB). [COB transactions do not affect most submitters. These transactions are claims information sent to other health insurers to coordinate benefits between primary and supplemental insurance.]
• Querying patient eligibility
• Checking claim status
• Health plan premium payments
• Benefit enrollment and maintenance
• Referral authorization and certification

The standards for submitting the above transactions will be fully implemented October 16, 2002 (October 16, 2003, for small health plans receiving COBs). When fully implemented, Medicare contractors and other health care payers will be prohibited from accepting or issuing transactions that do not meet the new standards.

Health care providers who conduct business electronically are urged to begin considering what steps they may need to take to upgrade their software to conform to the new standards. This can be done either independently or through commercial vendors. Health care providers can also consider arranging for the services of a commercial clearinghouse or billing service knowledgeable about the new requirements to translate data on their behalf. Either way, all electronic submitters must be prepared to meet the October 16, 2002 implementation date.

To assist our submitter community, Empire will be publishing a series of articles in our regular publications and in special HIPAA publications. To help in understanding this information, we have included a list of commonly used terminology and acronyms and the definition of each in the following article. We recommend that submitters retain this article as a handy reference.

In addition, a copy of the Transaction and Code Set Final Rule, as well as more information on the full range of Administrative Simplification requirements can be obtained at: http://aspe.hhs.gov/admnsimp

HIPAA Definitions and Acronyms
ANSI: American National Standards Institute
ANSI X12N Version 4010: American National Standards Institute (ANSI) adopted standard and current version for electronic data interchange transactions.

Centers for Medicare and Medicaid Services (CMS): Part of the Department of Health and Human Services (HHS) responsible for administration of Medicare and Medicaid programs. Formerly know as HCFA-Health Care Financing Administration.

Compliance Date: Date by which a covered entity must comply with a standard implementation specification or modification.

Coordination of Benefits Transaction (COB): A transaction sent from any entity (usually an insurer) to a health plan (another insurer) for the purposes of determining the relative payment responsibilities of the health plan of either of the following for health care:

• Claims
• Payment information

Covered Entity: One of the following:

• Health Plan
• Health Care Clearinghouse
• Health Care Provider who transmits any health information in connection with a transaction covered by the adopted standard

Designated Standard Maintenance Organization (DSMO): An organization designated by the Secretary of Health and Human Services to:

• Maintain adopted standards
• Receive and process requests for adopting a new standard or modifying an adopted standard

Electronic Data Interchange (EDI): Transfer of electronic information between two parties to carry out financial and administrative activities.

Health Care Clearinghouse: A public or private entity that does either of the following:

• Processes or facilitates the processing of information received from another entity in a nonstandard format or containing nonstandard data content into standard data elements or a standard transaction
• Receives a standard transaction from another entity and processes or facilitates the processing of information into nonstandard format or nonstandard data content for a receiving entity

Health Care Financing Administration (HCFA): Part of the Department of Health and Human Services (HHS) responsible for administration of Medicare and Medicaid programs. Now known as Centers for Medicare and Medicaid Services (CMS).

Health Care Provider: A provider of services as defined in Section 1861 (u) of the Social Security Act (SSA), a provider of medical or other health services as defined in Section 1861 (s) of the SSA, and any other person or organization who furnishes or bills and is paid for health care in the normal course of business.

Health Insurance Portability and Accountability Act (HIPAA): An Act enacted by the federal government on August 21, 1996, with the intent to assure health insurance portability, reduce health care fraud and abuse, guarantee security and privacy of health information and enforce standards for health information.

Health Plan: An individual or group plan that provides or pays the cost of medical care. Includes Group Health Care Plans, Health Insurance, Health Maintenance Organizations (HMOs), Medicare, Medicaid, etc.

Implementation Guide (IG): Published guides that describe the implementation specifications for each of the covered transactions. All guides are available through the Washington Publishing Company at www.wpc-edi.com/hipaa

Implementation Specification: Specific instructions for implementing a standard.

Small Health Plan: A health plan with annual receipts of $5 million or less.

Standard: A prescribed set of rules, conditions or requirements describing the following information for products, systems, services or practices:

• Classification of components
• Specification of materials, performance or operations
• Delineation of procedures

Standard Setting Organization (SSO): An organization accredited by the American National Standards Institute (ANSI) that develops and maintains standards for information transactions or data elements, or any standard that is necessary for, or will facilitate implementation.

Standard Transaction: A transaction that complies with the applicable adopted standard.

Trading Partner: Any entity that exchanges data electronically with another entity. When a provider submits data to an insurer through a clearinghouse, both the provider and the clearinghouse are considered trading partners with the insurer.

Trading Partner Agreements: Written agreement and rules for the exchange of electronic data between entities. Trading partner agreements contain information such as types of transactions to be transmitted, transmission or communication protocols, demographic information, rules for submission of data, etc.

Transaction: The exchange of information between two parties to carry out financial or administrative activities related to health care. This includes the following:

• Health care claims
• Health care payment and remittance advice
• Coordination of benefits
• Health care claim status
• Eligibility for a health plan
• Health claims attachments

X12N-270/271 or 270/271:
ANSI standard for a beneficiary eligibility query (270) and response (271).

X12N-276/277 or 276/277:
ANSI standard for a claim status inquiry (276) and response (277).

X12N-278 or 278:
ANSI standard transaction for referral certification and authorization.

X12N-820 or 820:
ANSI standard transaction for a health plan premium payment.

X12N-834 or 834:
ANSI standard transaction for benefit enrollment and maintenance.

X12N-835 or 835:
ANSI standard electronic remittance advice (ERA) transaction. Provides payment information on the submitted claim.

X12N-837 or 837:
The standard health care claim transaction sent from a provider to a Health Care Plan (insurer).

There are three implementation guides:

• institutional (Part A)
• professional (Part B)
• dental

The 837 format is also used to send COB information from one insurer to another.

X12N-997 or 997:
The functional acknowledgement of a sent transaction. The 997 provides information on whether the transaction was accepted and if not, communicates information on errors found. Although use of this transaction is not mandated, the 997 has gained industry wide acceptance and all of the implementation guides recommend use of the 997.

Steps to Get Ready for HIPAA
For All Electronic Submitters:
If your office has not yet developed an implementation plan for the Health Insurance Portability and Accountability Act (HIPAA), you may feel overwhelmed or think that it is too late.

Below are some steps to help with HIPAA planning and implementation:

1. Read the final rules - This is a must as your organization needs to know what the HIPAA rules are in order to implement them in a timely and effective manner. For a Portable Document Format (PDF) version of the final rule for claims and remittance advice, reference the Web site http://aspe.os.dhhs.gov/admnsimp/final/txfinal.pdf
2. Organizational awareness - Everyone in your organization who can potentially be affected by HIPAA should have at least a general knowledge of HIPAA and how their job functions could be impacted.
3. Assign HIPAA responsibilities - You cannot assume that someone is taking responsibility for HIPAA. Create a HIPAA team and define the roles of each member or subcommittee. You may need to dedicate resources or staff to specifically work on HIPAA issues.
4. Assess impacts on current and future transaction systems and interfaces - HIPAA may affect your future plans. More importantly, the impact on current processes and systems must be determined.
5. Plan compliance strategy front-end and back-end -How will your organization comply with the HIPAA regulations both for sending claims and receiving data from health care plans? Ask your system vendor or in-house programming staff what their HIPAA plans are or when they anticipate being HIPAA compliant.
6. Design solutions - What system changes or process changes are needed for HIPAA compliance? How will your organization implement these changes? At this step, implementation, transition, and conversion plans should be developed. Networking with other providers, payers and associations could also be helpful.
7. Funding - HIPAA implementation will be much bigger than the Year 2000 (Y2K) project in terms of resources and time. This will in turn affect your budgets.

Key HIPAA Implementation Dates
For All Electronic Submitters, Vendors, Clearinghouses & Billing Services
The following is a list of future key Health Insurance Portability and Accountability Act (HIPAA) implementation dates for Medicare. Please note that although legislation may delay some of these dates, the Carriers for Medicare and Medicaid Services (CMS) formerly Health Care Financing Administration (HCFA) intends to honor the dates below for the Medicare health care claim (837), the Electronic Remittance Advice (ERA) (835) and the Coordination of Benefits (COB) (837) transactions regardless of future legislative actions.

The dates indicated below are for implementation of the health care claim, ERA, and COB only. Future articles will contain information on the health claim inquiry and the beneficiary eligibility transactions that will be implemented in the future.

• The code to process the 4010 version of the 837 health care claim, the 835 remittance advice and the 837 COB for Part A and Part B was implemented in the Medicare standard processing test systems by August of 2001. Once it has been thoroughly tested, the upgraded Medicare Part A and Part B software will be moved into Empire production environments by October 1, 2001. At that time, Empire will begin external testing.
• A small group of selected submitters will begin testing with Empire soon after the HIPAA standard Claim and COB formats are implemented in Empire's processing system.
• Testing with all electronic submitters as they transition to the HIPAA standard Claim and COB formats will begin in October of 2001. Submitters will be moved into production upon completion of their tests.
• To ensure there is time to test all electronic submitters prior to the final production date (October 16, 2002), you must request a test appointment by June 30, 2002.
• Testing for the 837 health care claim must be completed by October 1, 2002 in order to meet the mandated implementation date.
• The free electronic Part B software, PC-ACE, updated to support the HIPAA designated formats will be available for distribution to submitters by April 2002. The new software will be known as PC-ACE Pro 32. Medicare will support the PC-ACE Pro 32 software until October 2003.
• The Direct Data Entry System, called OMNIPRO, will continue to be supported until further notice.
• As of October 16, 2002 all current Electronic Data Interchange (EDI) submitters must use the X12N 4010 transactions for the incoming health care claim (837), the outgoing Electronic Remittance Advice (835) and the outgoing COB (837). The only exception is for COB transactions to other insurers. For other insurers that are classified as small health plans (no greater than $5 million annual revenue), the final compliance date is October 16, 2003.

Consolidated Front-End Collection System
For All Electronic Submitters, Vendors, Clearinghouses & Billing Services
With the implementation of the Health Insurance Portability and Accountability Act (HIPAA), Empire will be improving our front-end collection system. This new environment will process all American National Standards Institute (ANSI) version 4010 transactions as well as monitor file submission, Electronic Remittance Advice (ERA) delivery and delivery of reports. This consolidated collection environment will have many benefits:

• Collection and delivery will be consolidated so submitters will be able to send their claims and retrieve reports and remittances at one common point.
• There will be one phone number for all lines of business for those transmitting files asynchronously.

Submitters will no longer be able to submit multiple lines of business (Medicare claims and Empire BCBS and Quicklink claims) during a single transaction. Each line of business will need to be transmitted separately.

Trading Partner Agreements
For All Electronic Submitters, Vendors, Clearinghouses & Billing Services
A trading partner is defined as "any entity that exchanges data electronically with another entity." In this case, entities refer to providers, clearinghouses, billing services, coordination of benefits (COB) trading partners (other insurers) and Medicare administrators, such as Empire. It is important to understand that there can be several trading partner relationships involved in a single transaction. For example, if a provider submits electronic claims to Empire through a clearinghouse, the clearinghouse is a trading partner to Empire and the provider is also a trading partner to Empire and to the clearinghouse. Empire would have a trading partner agreement with both the clearinghouse and the provider.

A trading partner agreement is a written agreement that lays out the rules for the exchange of electronic data between entities. The trading partner agreement specifies many things such as communication protocols, types of transactions and relationships with other trading partners (if applicable). The trading partner agreement also clearly defines the duties and responsibilities of each party to the agreement in conducting an electronic transmission.

The implementation of the Health Insurance Portability and Accountability Act (HIPAA) standard transactions will require new trading partner agreements with every electronic submitter. In addition to the types of information listed above, the new trading partner agreements will contain very specific information such as identifying information that must be contained in certain data fields and precise items that Empire will require to process the transaction correctly. Also, different lines of business within Empire (i.e., Medicare versus Empire BCBS, Empire HealthChoice, Empire Well- Choice and QuickLink Commercial Claims) may require separate trading partner agreements since processing requirements vary between the two systems.

Empire is in the process of developing new trading partner agreements. The trading partner agreements will be published when available and will go hand-in-hand with the standard X12N 4010 837. In addition, a trading partner agreement will be made available for the X12 4010 835 Standard Remittance Transaction.

Implementation Guide
In accordance with HIPAA guidelines, there are four specific actions that a trading partner agreement can not do:

1. Modify the definition, condition, or use of a data element or segment in the standard implementation guide.
2. Add any additional data elements or segments to the standard implementation guide.
3. Utilize any code or data values that are not valid in the standard implementation guide.
4. Change the meaning or intent of the standard implementation guide. The trading partner agreement will not replace the Electronic Data Interchange (EDI) Enrollment Form. Rather, it will be an addendum to our current EDI Enrollment Form that we have for each electronic submitter. Our standard EDI Enrollment Form can be found on our Web site. Future articles will contain more information about the new trading partner agreement requirements.

Elimination of CMS Free Billing Software and Interim Free Software Solution
Since the late 1980s, CMS, formerly the Health Care Financing Administration (HCFA) has required all Medicare contractors, including Empire, to offer free electronic claim entry software to their providers upon request. This free software was mandated by HCFA as an avenue to promote electronic claims submission, as well as give providers a solution to accommodate the Medicare-specific Part A and Part B electronic interchange formats used today.

With the advent of the Health Insurance Portability and Accountability Act (HIPAA) electronic standards, there will no longer be Medicare-specific electronic formats. Providers will submit claims to all payers, including Medicare, using the standard formats defined by HIPAA.

These changes have prompted CMS to reassess the free software support requirements currently imposed on Medicare contractors. Effective October 2003, approximately one year after all HIPAA standards are implemented, all Medicare contractors, including Empire, will stop distributing and supporting their free electronic claim entry software (Source: HCFA Program Memorandum AB-01-29, dated February 8, 2001).

As an interim HIPAA solution, Empire will be distributing free billing software, called PC-ACE Pro 32, that supports the submission of Medicare Part A and Part B claims in the mandated American National Standards Institute (ANSI) X12N format (version 4010). The updated software will be available on request and is expected to be ready for distribution to submitters by April 2002.

PC-ACE Pro 32 is a user-friendly application designed for Microsoft Windows. PC-ACE allows the user to prepare, verify, and transmit electronic claims while maintaining accurate records of all transactions.

PC-ACE Pro 32 software may require some submitters to upgrade or replace their current personal computer systems since the new transactions will require increased processing power and memory. The minimum personal computer requirements for the upgraded PC-ACE software are:

• Pentium 133 MHz processor (Pentium II-350 for larger claim volume)
• 32 MB system memory (64 MB recommended)
• CD-ROM drive (recommended for server installation)
• SVGA monitor resolution (800 x 600)
• Windows 95, 98, 2000 or NT 4.0 operating system
• Adobe Acrobat Reader Version 4.0 (for overlaid claim printing)

It is important to note that Medicare contractors provide this free billing software as a service to our electronic submitters. However, submitters are not required to use this software and are encouraged to investigate all avenues for electronic claim submission (other vendor software, clearinghouses, billing services, etc.) to find the solution that best suits their business needs.

Empire may choose to support electronic billing software past the Medicare 2003 deadline, however, that decision has not yet been made. Please look for further articles that will update our private side submitters with further information on this subject.

Submitter Testing
For All Electronic Submitters, Vendors, Clearinghouses & Billing Services
All electronic submitters will be required to pass certain levels of testing on the X12N 4010 837 Health Care Claim before being moved into production. Empire will begin this testing with the universe of electronic submitters once all internal system testing and BETA testing with a small selected group of submitters has been successfully completed. This will be as close to October 1, 2001 as possible.

Testing will be scheduled on a first come, first served basis. To ensure that there is time to test and correct problems prior to the final production date of October 16, 2002, submitters must request a testing appointment by June 30, 2002. If you are interested in testing, please contact the EMC Marketing Department at (212) 476-7952 or (212) 476-7934.

Although testing of the 835 Electronic Remittance Advice (ERA) and the 837 Coordination of Benefits (COB) is not required, we strongly encourage our submitters and trading partners to test these transactions prior to placing them in production. Again, to ensure there is time to test, submitters should request a testing appointment by June 30, 2002 for these transactions. Current electronic submitters and trading partners will automatically be sent production X12N 837 COB and X12N 835 ERA transactions on October 16, 2002, whether they have successfully tested or not. If an EDI submitter is using a vendor, clearinghouse or billing service to generate a certain transaction and that entity has passed testing requirements for a specific transaction and is using the same program to generate the transaction for all of their clients, then all clients will not necessarily be required to test prior to our acceptance of production data. However, Empire will require documentation indicating what service the submitter is using and that service (vendor, clearinghouse, or billing service) must have conducted a sufficient number of tests with Empire. A provider, provider agent, or any trading partner that elects to use a clearinghouse or other service to generate their transactions is liable for these costs. There will be no charge for testing with Empire.

HIPAA Web Sites
For All Electronic Submitters, Vendors, Clearinghouses & Billing Services

Below is a list of Web sites that contain Health Insurance Portability and Accountability Act (HIPAA) information, along with a summary of what type of information is provided at each site.

www.cms.hhs.gov/providers/edi/
This is the Electronic Data Interchange (EDI) home page for the Centers for Medicare & Medicaid Services (CMS) Web site.

http://www.wpc-edi.com/hipaa
This links to the Washington Publishing Company Web site, which contains all the implementation guides, data conditions and the data dictionary for the version 4010 transaction implementation guides.

http://aspe.os.dhhs.gov/admnsimp
This Web site links to the Department of Health and Human Services Web site regarding the administrative simplification provision of HIPAA. This site includes general information about the administrative simplification law, an explanation of the Notice of Proposed Rulemaking (NPRM) process, update on when HIPAA standards may be implemented and presentations made by parties regarding HIPAA. You can also subscribe to receive e-mail updates on HIPAA.

www.disa.org
Data Interchange Standards Association's (DISA) Web site (select the insurance, X12N, subcommittee), contains information on X12N subcommittees, task groups and workgroups, including meeting minutes. This site will also contain the test conditions and results of HIPAA transactions tested at the workgroup level.

www.hipaadvisory.com
Phoenix Health Systems has a Web site devoted to HIPAA news. You can also subscribe to a free monthly newsletter and join discussion groups to discuss HIPAA topics.

www.wedi.org
WEDI, the Workgroup for Electronic Data Interchange, uses this Web site to list conferences on HIPAA topics and lists the availability of resources of standard transactions.

www.nucc.org
This is the National Uniform Claims Committee (NUCC) Web site containing information on non-institutional claim submissions. This group is one of the associations involved in data definition and is part of the data content committee.

www.nubc.org
This Web site, created by the National Uniform Billing Committee (NUBC), contains standards for institutional claims. NUBC is another member of the data content committee.

www.aha.org/hipaa/hipaa_home.asp
The American Hospital Association Web site contains this page specific to HIPAA standards and will be a useful source of information for HIPAA implementation for hospitals.

© All current procedural terminology (CPT) codes and descriptors copyrighted by the American Medical Association.