ACA Operating Rules Update and Implementation Plans Gwendolyn Lohse, CAQH Priscilla Holland, NACHA March 11, 2011
Today s Administrative Data Exchange Environment Challenge Beginning with the mandated specifications of HIPAA and the expansion and extension of those provisions through the Patient Protection and Affordable Care Act (ACA), there is significant pressure on organizations to achieve internal business strategies as well as meet industry-wide and legislative requirements While improving infrastructure and lowering costs Within the limitations of resource constraints Solution Meaningful change must acknowledge these imperatives while aligning with the broader healthcare environment, e.g., HITECH, state initiatives, and clinical/administrative data integration 2
ACA: Section 1104 Highlights Section 1104 is labeled: Administrative Simplification To reach quality and cost goals, administrative simplification must occur; e.g., how can cost comparisons be done when patient financial responsibility isn t available? This section amends HIPAA...we are now in a new world Administrative and Financial standards and operating rules must, e.g., Enable the determination of eligibility and financial responsibility for specific services prior to or at the point of care Be comprehensive, requiring minimal augmentation Provide for timely acknowledgment, response, and status reporting All stakeholder types touching the data are impacted Health plans will need to file a statement with HHS confirming compliance; some type of certification and testing will also be required. Penalties are significant and compliance process scheduled to start December 31, 2013. 3
ACA Section 1104: Mandated Operating Rule Approach Rule adoption deadlines Operating rule writing and mandated implementation timeframe Effective Dates 2 d font indicates that CORE Phases I III has placed a focus on these areas. Scope/definition of the Federal regulation is TBD but NCVHS has recommended CORE Phase I and II, with enhancements (2) Documentation of compliance will be identified by Federal regulation. Health plans must demonstrate that the plan conducts the electronic transactions in a manner that fully complies with the regulations provides documentation showing that the plan has completed end-to-end testing for such transactions with their partners, such as hospitals and physicians. HHS may designate independent, outside entities to certify that a health plan has complied with the requirements. 4
Operating Rules: Key Components Rights and responsibilities of all parties Security Operating Rules: Key Components Response timing standards Liabilities Exception processing Transmission standards and formats Error resolution 5
What are Operating Rules and How They Differ From Standards Operating rules build upon standards to encourage interoperability; can be used with any system ACA definition: the necessary business rules and guidelines for the electronic exchange of information that are not defined by a standard or its implementation specifications Prior to CORE, which is a voluntary industry collaboration, operating rules did not exist in healthcare outside of individual trading relationships. Rules provide the system and ability to have common Companion Guide content so adopting and exchanging evolving administrative data becomes the norm: Clarify ambiguity in standard or implementation guide, e.g., service descriptions Fill gap in standard, e.g., creation of business cases to drive use of claim status codes Build on data content specifications in standard or its implementation guide, e.g., require use of fields like patient financials that currently are recommended Address use of other standards that enable operation of HIPAA standards and addresses their business role, e.g., HTTPS, digital certificates 6
Operating Rules and Standards: Working in Unison as Both are Essential Operating rules should always support standards they already are being adopted together in today s market Benefits of operating rules co-existing and complementing standards are evidenced in other industries Various sectors of banking (e.g., credit cards & financial institutions) Different modes of transportation (e.g., highway & railroad systems) Current health care operating rules build upon a range of standards HIPAA standards, e.g., require non-mandated aspects of ASC X12 given data such as in/out of network patient responsibility is critical to administrative simplification Non-HIPAA healthcare standards, e.g., ASC X12 acknowledgements Industry neutral standards, e.g., SOAP and WSDL Scope between rules and standards will be iterative as already demonstrated: Items required by the rules will, in some instances, be moved into the next version of a standard and removed from rules, e.g., ASC X12 v5010 includes some CORE Phase I data content requirements and thus in Jan 2012 CORE rules will no longer require these elements 7
Operating Rules Today: Financial Industry NACHA The Electronic Payments Association: Non-profit association and rule-making body for the ACH Network Develops and enforces the NACHA Operating Rules for electronic funds transfer (EFT) Standards organization for EFT payments through the ACH; ACH Network is accessible by over 14,000 US financial institutions Federal government is the largest user of EFT payments through the ACH Network Supports the industry through its Councils, education, and fostering industry dialogue, along with 18 Regional Payment Associations Rules are amended through a deliberative and inclusive process similar to that used by Federal agencies under the Administrative Procedures Act Supports CAQH CORE for healthcare operating rules: CAQH partner since 2005 8
What Can Healthcare Learn From Financial Services? Collaboration within financial services on operating rules has allowed for essential, and daily tools, such as the ATM, direct deposit or credit card payments...billons of transactions flow with trust and speed EFT and ERA operating rules represent the convergence of the financial services industry and healthcare Must be coordinated to have administrative cost savings Moving paper checks to electronic payments Only 10% healthcare payments occur electronically today Industry-wide - $11 billion in annual savings (U.S. Healthcare Efficiency Index Fact Sheet) 9
Operating Rules Today: Healthcare Industry CAQH CORE The Committee on Operating Rules for Information Exchange: Multi-stakeholder collaboration developing industry-wide operating rules to streamline administrative healthcare transactions Sponsored by CAQH, a nonprofit focused on administrative simplification Participants create and approve the operating rules through an established consensus-based process with multiple levels of review and voting Health plans, providers, vendors, CMS and other government agencies, associations, regional entities, SDOs and other healthcare entities; 75% of the commercially insured plus Medicare and some Medicaids Driving adoption that is validated by testing E.g., 50% of commercially insured are now offering real-time patient financials, providing improved system availability, delivering acknowledgements, etc; vendors are offering non-proprietary connectivity methods Testing requirements by phase and certification via independent testing Certification Seal sets expectation that functionality from rule set is available 10
CORE Phased Approach Design CORE Rule Development Phase I Rules ARRA HITECH and Health Reform Phase II Rules Phase III Rules Future Phases 2005 2006 2007 2008 2009 2010 2011 Market Adoption (CORE Certification) *Oct 05 HHS launches national IT efforts Phase I Certifications Phase II Certifications REMINDER: CORE rules are a baseline; entities are encouraged to go beyond. 11
Alignment: It Is What Moves the Meter Streamlined access and data transparency will not occur without alignment within the industry and between industries we can t afford alternative Activities within CORE are developed to support, integrate and share with state, regional and national efforts, for example: National, e.g. NHIN and CORE Connectivity are aligned as demonstrated at ONC area within HIMSS11 s IHE; NCPDP also working in unison in this area Medicaid Information Technology Architecture (MITA) design using rules CORE rules supports non-mandated aspects of HIPAA v5010 Human-readable aspects of WEDI Health ID Card Guide supported by rules State/Regional, e.g. CORE rules were recommended to legislatures by state-sponsored, multistakeholder committees, e.g., TX, OH and CO; other states have addressed many of the data content areas CORE rules address, e.g., MN, WA State Health Information Exchanges (HIEs) are considering how to implement the rules 12
CORE Phase I, II and III Operating Rules: Overview Phase I alone provides significant ROI, e.g. 10-12 percent reduction in provider bad debt Rules Phase I Phase II Phase III (draft) Eligibility Data Content Infrastructure For 10 key services: Coverage information Static financials (co-pay, coinsurance, base deductibles) In/out of network variances Connectivity via Internet Acknowledgements (transactional) Real-time and batch turnaround times System availability Companion Guide flow/format For 40+ services provide: Phase I requirements + YTD deductible Connectivity: Phase I + plug and play method (SOAP) and digital certificates Patient identification Claims Status N/A Connectivity via internet Acknowledgements (transactional) Real-time and batch turnaround times expands System availability Companion Guide flow/format Claim Payment/ Advice Remittance Prior Authorization expands expands expands expands For 30+ more services provide: All financial information required in Phase I and II, plus annual out of pocket maximums Connectivity enhancements to speak to coordination with other industry efforts. Establishes process that allows for tracking claims in the adjudication system Maintain claim history for 24+ months from time claim enters adjudication system Floor of code combinations to bring uniformity/consistent in reporting status N/A N/A Promotes increased availability and usage of transaction through application of CORE infrastructure rules Sets timeline for dual paper-electronic delivery N/A N/A Promotes increased availability and usage of transaction through application of CORE infrastructure rules Health ID Card N/A N/A Specifications for human-readable data 13 elements, two of which are also machinereadable
IBM CORE Phase I Measures of Success Study (6 national and regional health plans, representing 33 million commercial members, 1.2 million providers and 22 million eligibility verifications per month, 30 million claims per month; 5 clearinghouses and vendors; 6 providers: hospitals, physician groups, surgery center) Stakeholder-Specific Findings Providers Provider groups working with CORE participating health plans saw 10-12% fewer claim denials, a 20% increase of patients verified prior to a visit, and higher rates of paid accounts Electronic verifications by providers took about seven minutes less than telephone verifications, saving about $2.10 per verification Health Plans Health Plans realized payback in less than one year Every health plan saw savings average annual reduction in administrative costs can be over $2.5 million per plan Vendors and Clearinghouses Vendors and clearinghouses play a crucial role in accelerating adoption of electronic transactions The time needed by vendors and clearinghouses to connect to trading partners significantly reduces with a common approach to connectivity 14
CAQH CORE Role in Relation to ACA: Key Actions to Date Testifying to NCVHS, which is the Committee named to make recommendations to HHS on Section 1104 CAQH CORE recommended as the non-retail pharmacy authoring entity for eligibility and claim status; CORE Phase I and II Rules recommended as operating rules for eligibility and claim status with potential enhancements Encouraging dialogue on both the ongoing need for standards and operating rules to work in unison, and for national operating rules to consider lessons learned by states Goal: Unified process to create national, coordinated operating rules that serve as evolving national baseline Submitted CORE application to be the authoring entity for EFT and ERA to CMS in January; was done with direct support by NACHA Formed CORE Transition Committee to develop an adjusted CORE governance and identify methods to increase state and provider involvement Transition Committee begins meeting March 18 th includes senior executives from National Governors Association, AHA, State of Minnesota, etc. 15
Financial Services and CORE Moving Forward: Examples CORE and NACHA: Rule writing partnership CORE application to CMS to become the EFT and ERA authoring entity was submitted in partnership with NACHA; highlighting joint research already completed NACHA will update its rules through its voting process NACHA will provide support as CORE drafts proposed healthcare EFT and ERA rules; considering potential role of advisory committees Voting and participating in CORE rule development Financial institutions (FIs) can directly join CORE, e.g., five banks and several relevant vendors are already participating in CORE must touch transaction to vote CORE Transition Committee composition includes bank executive CORE certification available to appropriate FIs NACHA/FIs and CAQH: Non-rule writing efforts EFT enrollment utility need analysis Joint outreach, education and ROI tracking Joint educational sessions with provider associations like AMA 16
Next Steps: 2011 Transition CORE governance given move to mandatory environment Section 1104 is an unfunded mandate; Transition Committee will develop three to five year plan while CAQH continues to fund CORE Increasing state and provider input is critical goal Continue to create open, well-vetted CORE operating rules that build on standards and speak to real-world business needs Rule scope should provide feasible road-map focused on value and interdependencies, e.g., coverage exchanges will need to display data EFT (CCD+ format) and ERA rule writing between now to October deadline; eligibility and claim status enhancements being finalized Highlighting iterative process with standards and support of standards Continue to offer certification with independent testing organizations Maintain ongoing tracking of ROI and issue public reports IBM retained to track Phase II impact; providers considering regional case studies Increase education, outreach and demonstration, e.g., healthcare must learn more about financial service industry, especially with regard to EFT 17
18 Questions?