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Friday, Aug. 11, 2000
Contact: HCFA Press Office
(202) 690-6145



HHS Secretary Donna E. Shalala today announced standard formats to streamline the processing of health care claims, reduce the volume of paperwork, save the U.S. health care system billions of dollars and provide better service for providers, insurers and patients.

The new standards, described in a regulation to be published in the Federal Register, establish standard data content and formats for submitting electronic claims and other administrative health transactions. All health care providers will be able to use the electronic format to bill for their services, and all health plans will be required to accept these standard electronic claims, referral authorizations and other transactions.

"From the beginning of this administration, President Clinton has been committed to using new technology to benefit both the American people and American business. This is just the latest in a series of actions by the Clinton administration that improve quality and efficiency while also cutting costs and protecting privacy," Secretary Shalala said. "These standards are important steps toward a faster, simpler, less costly and more efficient health care system. Working closely with the private sector, we have developed standard electronic formats to replace today's costly and complex forms."

By promoting the greater use of electronic transactions and the elimination of inefficient paper forms, the administrative simplification regulations are expected to provide a net savings to the health care industry of $29.9 billion over 10 years.

The proposed regulation was required by the Health Insurance Portability and Accountability Act of 1996, known as HIPAA. In developing the proposal, HHS consulted extensively with private sector organizations and individuals and published a preliminary rule in 1998. More than 17,000 public comments on the proposal were received.

"Each comment was studied in preparing the final rule issued today," Shalala said. "The issues were very complex, but our consultations with the private sector helped us to resolve the issues and present solid solutions in the final regulation."

HHS will take additional steps later this year, issuing further regulations under HIPAA authority to improve the processing of health care transactions. These regulations will establish national identification numbers for employers and health care providers to speed claims processing and lower costs. In addition, HHS will lay out steps to make electronic health data secure, and protect the privacy of patients' medical and health insurance records. This will be done without the need for a unique personal identifier for individual patients.

At present, different insurers require different electronic and paper forms from health care providers filing claims. Under the new regulation all electronic claims transactions must follow the single standardized format. Providers will still be allowed to use paper forms, but the simplified process is expected to encourage more electronic filing.

By law, health plans -- with the exception of small self administered plans -- health care clearinghouses, and health care providers that choose to transmit their transactions in electronic form must comply with these rules within 26 months from the date of publication of this final rule, except that small health plans have an additional year in which to comply.

Other provisions include the following:

  • Health plans will be able to pay providers, authorize services, certify referrals, and coordinate benefits using a standard electronic format for each transaction. Providers also will be able to use a standard format to determine eligibility for insurance coverage, ask the status of a claim, request authorizations for services or specialist referrals, and receive electronic remittance to post receivables.
  • The regulation also includes new standards for other common transactions and coding standards for reporting diagnoses and procedures in the transactions.
  • Employers who provide health insurance to their workers and their dependents also will be able to use a standard electronic format to enroll or disenroll employees and to submit premium payments to any health plan they contract with.
  • The regulation outlines a process for maintaining the format and content of the standard transactions system. National health care standard organizations and data content committees will accept and review requests for changes to the standards.

"These new standards are a win-win for health care providers and their patients," said Nancy-Ann DeParle, administrator of the Health Care Financing Administration, which runs the Medicare and Medicaid programs. "Information exchange will be more efficient and accurate, and providers will be able to spend less time on paperwork, and more time on the health care of their patients."

Secretary Shalala cautioned that this rule is being released under the assumption that privacy protections will be in place at approximately the same time the rule takes effect. By the compliance date, HHS expects that its regulation on privacy of medical records will also be in effect, or Congress will have enacted such protections. The HHS regulation on privacy has been published as a proposal and is expected to be issued as a final rule later this year. If such privacy protections were not in place, HHS will seriously consider suspending or withdrawing the transaction regulation, pending appropriate privacy protections.