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


The ASC X12N 834 may be used by an employer or other sponsor to electronically enroll or disenroll its subscribers into or out of a health plan. Currently, most small and medium size employers and other sponsors conduct their subscriber enrollments using paper forms. We cannot quantify how many of these sponsors use paper forms, but anecdotal information indicates that most use paper. We understand that large employers and other sponsors are more likely to electronically conduct subscriber enrollment transactions because this method makes it easier to respond to the many changes that occur in a large workforce; for example, hirings, firings, retirements, marriages, births, and deaths. Large employers currently use proprietary electronic data interchange formats, which differ among health plans, in order to conduct subscriber enrollment. Nonetheless, it is our understanding, based on anecdotal information, that health plans still use paper to conduct most of their enrollment transactions.

We expect that the impact of the ASC X12N 834 transaction standard will differ, at least in the beginning, according to the current use of electronic transactions. As stated earlier, at the present time, most small and medium size employers and other sponsors do not use electronic transactions and will therefore experience little immediate impact from the adoption of the ASC X12N 834 transaction. The ASC X12N 834 will offer large employers, currently conducting enrollment transactions electronically, the opportunity to shift to a single standard format. A single standard will be most attractive to those large employers that offer their subscribers choices among multiple health plans. Thus, the early benefits of the ASC X12N 834 will accrue to large employers and other sponsors that will be able to eliminate duplicative hardware and software, and human resources required to support multiple proprietary electronic data interchange formats. In the long run, we expect that the standards will lower the costs of conducting enrollment transactions, thus making it possible for small and medium size companies to achieve significant additional savings by converting from paper to electronic transactions.

Overall, employers and other sponsors, and the health plans with which they deal, stand to benefit from the adoption of the ASC X12N 834 and electronic data interchange. The ASC X12N 834 and electronic data interchange will facilitate the performance of enrollment and disenrollment functions. Further, the ASC X12N 834 supports detailed enrollment information on the subscriber’s dependents, which is often lacking in current practice. Ultimately, reductions in administrative overhead may be passed along in lower premiums to subscribers and their dependents.