Health Insurance Reform: Standards for Electronic Transactions. C. Introduction


The Department assessed several strategies for determining the impact of the various standards that the Secretary will designate under the statute. The costs and savings of each individual standard could be analyzed independently, or the Department could analyze the costs and savings of all the standards in the aggregate. The decision was made to base the analysis on the aggregate impact of all the standards. Given that all the standards are likely to be made final within a reasonable period of one another, it is likely that organizations will seek to make changes to comply with all the regulations at the same time, at least for those components of the regulations that require computer and technology changes. This will be the most efficient investment for most affected organizations, and the estimates the Department has obtained from industry sources are based on this assumption.

The statute gives health care providers and health plans 24 months (36 months for small health plans) to implement each standard after the effective date of the final rule. This provides the industry flexibility in determining the most cost-effective means of implementing the standards. Dictated by their own business needs, health plans and health care providers may decide to implement more than one standard at a time or to combine implementation of a standard with other system changes. As a result, overall estimates will be more accurate than individual estimates.

Assessing the benefits of implementing each standard independently could also be inaccurate. While each individual standard is beneficial, the standards as a whole have a synergistic effect on savings. For example, the combination of the standard health plan identifier and the standard claim format will improve the coordination of benefits process to a much greater extent than use of either standard individually.

It is difficult to assess the costs and benefits of such a sweeping change because no-one has historical experience with this unique area. Moreover, the standardization of electronic transactions will spur secondary innovations, particularly in e-commerce, that may be described generally but are too new to assess quantitatively. Consequently, the analysis of these secondary benefits will be qualitative.