Questions Submitted by the Public, by Date Posted to the Website. Parties to transaction use same clearinghouse

11/02/2001

If a clearinghouse performs a transaction on behalf of two parties to the same transaction, how must it communicate with each party, and at what point must the transaction be in the standard?

For example, a provider contracts with a clearinghouse to send transactions to a health plan on its behalf. Health Plan A contacts with that same clearinghouse to receive transmissions from provider on the health plan's behalf. The clearinghouse receives a claim from the provider in non-standard format for submission to Health Plan A. The clearinghouse's agreement with Health Plan A requires the clearinghouse to send claims to Health Plan A in another non-standard format. Must the clearinghouse translate the provider's non-standard transmission to standard format before converting it to the non-standard format required by Health Plan A?


8/27/2000:

Section 162.923(a) requires a covered entity to conduct electronic transactions with other covered entities as standard transactions, and section 162.923(c) allows a covered entity to use a business associate to conduct these transactions. Section 162.923(c)(1) requires that where a covered entity uses a business associate to conduct all or part of a transaction on its behalf, the covered entity must, as relevant here, require the business associate to comply with the applicable requirements of the transactions rule. Also, under section 162.930, a health care clearinghouse may, when acting as a business associate for another covered entity, translate a standard transaction into a non-standard transaction or vice versa. Since a clearinghouse is also a covered entity, this latter provision operates as an exception to the requirement of section 162.923(a) that covered entities conduct transactions for which standards have been adopted as standard transactions.

The provider in the above scenario is using the clearinghouse as a business associate for the purpose of sending an electronic claim. The communication between the provider and the clearinghouse need not be a standard transaction. However, the covered provider must, under section 162.923(c)(1) require the clearinghouse to send the transaction as a standard transaction. Also, the clearinghouse must produce the transaction as a standard transaction for forwarding to Health Plan A, or it does not come within the exception provided for by section 162.930(b) and is consequently in violation of section 162.923(a).

In the above scenario, Health Plan A is also using the same clearinghouse as a business associate for the purpose of receiving a standard electronic claim. Health Plan A may contract with the clearinghouse to translate, on Health Plan A's behalf, a standard transaction to Health Plan A's non-standard format and, under section 162.930(a), the clearinghouse may do this on the health plan's behalf. The communication from the clearinghouse to Health Plan A need not be done as a standard transaction, because the communication comes within the exception provided for by section 162.930(a). Thus, the clearinghouse may translate the standard transaction into a non-standard transaction and forward it to Health Plan A.

The inescapable result of this logic is that a clearinghouse must use a standard transaction as an intermediate stage (even if only for a microsecond) when it serves both a health care provider and a health plan conducting a transaction using non-standard formats.