Health Insurance Reform: Standards for Electronic Transactions. a. Affected Entities


All health care providers and health plans that conduct EDI directly and use other electronic format(s), and all health care providers that decide to change from a paper format to an electronic one, would have to begin to use the ASC X12N 837 for submitting electronic health care claims (hospital, physician/supplier and dental). (Currently, about 3 percent of Medicare health care providers use this standard for claims; it is used less for non-Medicare claims.)

Some of the possible effects of adopting the ASC X12N 837 include the possibility of an initial disruption in claim processing and payment during a health plan’s transition to the standard format and the possibility that health care providers could react adversely to implementation costs and thus revert to hard copy claims.

Despite the initial problems health care providers may encounter with administrative simplification, health care providers will, in the long run, enjoy the advantages associated with not having to keep track of and use different electronic formats for different insurers. This will simplify health care provider billing systems and processes as well as reduce administrative expenses.

Health plans will, as long as they meet the deadlines specified in the statute, be able to schedule their implementation of the ASC X12N 837 in a manner that best fits their needs, thus allaying some costs through coordination of conversion to other standards. Although the costs of implementing the ASC X12N 837 are generally one-time costs related to conversion, the cost of systems upgrades for some smaller health care providers, health plans, and health care clearinghouses may be prohibitive. Health care providers and health plans have the option of using a health care clearinghouse to satisfy the HIPAA standard requirements.

Coordination of benefits

Once the ASC X12N 837 has been implemented, health plans that perform coordination of benefits will be able to eliminate the support of multiple proprietary electronic claim formats, thus simplifying claims receipt and processing as well as reducing administrative costs. Coordination of benefits activities will also be greatly simplified because all health plans will use the same standard format. There is no doubt that standardization in coordination of benefits will greatly enhance and improve efficiency in the overall claims process and the coordination of benefits.

From a non-systems perspective (meaning policy and program issues), there should not be an adverse effect on the coordination of benefits process. The COB transaction will continue to consist of the incoming electronic claim and the data elements provided on a remittance advice. Standardization of the information needed for coordination of benefits will clearly increase efficiency in the electronic processes utilized by the health care providers, health care clearinghouses, and health plans.