[Federal Register: June 16, 1998 (Volume 63, Number 115)]
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of the Secretary
45 CFR Part 142
Health Insurance Reform: National Standard Employer Identifier
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Proposed rule."
Summary and Introduction
SUMMARY: This rule proposes a standard for a national employer identifier and requirements concerning its use by health plans, health care clearinghouses, and health care providers. The health plans, health care clearinghouses, and health care providers would use the identifier, among other uses, in connection with certain electronic transactions.
The use of this identifier would improve the Medicare and Medicaid programs, and other Federal health programs and private health programs, and the effectiveness and efficiency of the health care industry in general, by simplifying the administration of the system and enabling the efficient electronic transmission of certain health information. It would implement some of the requirements of the Administrative Simplification subtitle of the Health Insurance Portability and Accountability Act of 1996.
DATES: Comments will be considered if we receive them at the appropriate address, as provided below, no later than 5 p.m. on August 17, 1998.
ADDRESSES: Mail written comments (1 original and 3 copies) to the following address:
Health Care Financing Administration,
Department of Health and Human Services,
P.O. Box 26676
Baltimore, MD 21207-0519.
If you prefer, you may deliver your written comments (1 original and 3 copies) to one of the following addresses:
Room 309-G, Hubert H. Humphrey Building,
200 Independence Avenue, SW.,
Washington, DC 20201, or
7500 Security Boulevard,
Baltimore, MD 21244-1850.
Comments may also be submitted electronically to the following e-mail address: firstname.lastname@example.org. For e-mail comment procedures, see the beginning of SUPPLEMENTARY INFORMATION. For further information on ordering copies of the Federal Register containing this document and on electroinc access, see the beginning of SUPPLEMENTARY information.
FOR FURTHER INFORMATION CONTACT:
Mary Emerson, (410) 786-7065
E-Mail, Comments, Procedures, Availability of Copies, and Electronic Access
E-mail comments should include the full name, postal address, and affiliation (if applicable) of the sender and must be submitted to the referenced address to be considered. All comments should be incorporated in the e-mail message because we may not be able to access attachments.
Because of staffing and resource limitations, we cannot accept comments by facsimile (FAX) transmission. In commenting, please refer to file code HCFA-0047-P and the specific section or sections of the proposed rule. Both electronic and written comments received by the time and date indicated above will be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, in Room 309-G of the Department's offices at 200 Independence Avenue, SW., Washington, DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m. (phone: (202) 690-7890). Electronic and legible written comments will also be posted, along with this proposed rule, at the following web site: JBurke1@hcfa.gov (Attn:HCFA-0047) or mail copies directly to the following:
Health Care Financing Administration,
Office of Information Services,
Information Technology Investment Management Group,
Division of HCFA Enterprise Standards,
Room C2-26-17, 7500 Security Boulevard,
Baltimore, MD 21244-1850
Attn: John Burke HCFA-0047, HCFA Reports Clearance Officer
Office of Information and Regulatory Affairs,
Office of Management and Budget,
Room 10235, New Executive Office Building,
Washington, DC 20503,
Attn: Allison Herron Eydt, HCFA Desk Officer.
VI. Response to Comments
Because of the large number of items of correspondence we normally receive on Federal Register documents published for comment, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the "DATES" section of this preamble, and, if we proceed with a subsequent document, we will respond to the comments in the preamble to that document.
[Please label written and e-mailed comments about this section with the subject: Impact.]
As the effect of any one standard is affected by the implementation of other standards, it can be misleading to discuss the impact of one standard by itself. Therefore, we did an impact analysis on the total effect of all the standards in the proposed rule concerning the national provider identifier (HCFA-0045-P), which can be found at 63 FR 25320.
We intend to publish in each proposed rule an impact analysis that is specific to the standard or standards proposed in that rule, but the impact analysis will assess only the relative cost impact of implementing a given standard. As stated in the general impact analysis in HCFA-0045-P, we do not intend to associate costs and savings to specific standards.
Although we cannot determine the specific economic impact of the standard being proposed in this rule (and individually each standard may not have a significant impact), the overall impact analysis makes clear that, collectively, all the standards will have a significant impact of over $100 million on the economy. Also, while each standard may not have a significant impact on a substantial number of small entities, the combined effects of all the proposed standards may have a significant effect on a substantial number of small entities. Therefore, the following impact analysis should be read in conjunction with the overall impact analysis.
This proposed rule has been reviewed in accordance with the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1501 et seq.) and Executive Order 12875. As discussed in the combined impact analysis to which we refer above (see 63 FR 25320), HHS estimates that implementation of the standards will require the expenditure of more than $100 million by the private sector. Therefore, the rule establishes a Federal private sector mandate and is a significant regulatory action within the meaning of section 202 of UMRA (2 U.S.C. 1532). HHS has included this statement to address the anticipated effects of the proposed rules pursuant to section 202.
These standards also apply to State and local governments in their roles as health plans or health care providers. Thus, the proposed rules impose unfunded mandates on these entities. While we do not have sufficient information to provide estimates of these impacts, several State Medicaid agencies have estimated that it would cost $1 million per State or territory to implement all of the HIPAA standards. However, the costs that these standards impose on these entities are well below the UMRA section threshold that will require additional analysis and consultation; the Congressional Budget Office analysis stated that “States are already in the forefront in administering the Medicaid program electronically; the only costs -- which should not be significant -- would involve bringing the software and computer systems for the Medicaid programs into compliance with the new standards.”
The anticipated benefits and costs of this proposed standard, and other issues raised in section 202 of the UMRA, are addressed in the analysis below and in the combined impact analysis. In addition, pursuant to section 205 of the UMRA (2 U.S.C. 1535), having considered a reasonable number of alternatives as outlined in the preamble to this rule and in the following analysis, HHS has concluded that the rule is the most cost-effective alternative for implementation of HHS’s statutory objective of administrative simplification.
Executive Order 12866
In accordance with the provisions of Executive Order 12866, this proposed rule was reviewed by the Office of Management and Budget.
Specific Impact of Employer Identifier
This is the portion of the impact analysis that relates specifically to the standard that is the subject of this regulation -- the employer identifier. This section describes specific impacts that relate to the employer identifier. However, as we indicated in the introduction to this impact analysis, we do not intend to associate costs and savings to specific standards.
1. Affected entities.
a. Health care providers.
Health care providers that conduct electronic transactions with health plans would have to obtain and use the EIN to identify the employer in those electronic transactions that require an employer identifier. In most cases health care providers currently obtain and use the EIN of the employer in those transactions that require an employer identifier. Any negative impact on health care providers generally would be related to the initial implementation period for providers that currently use an identifier other than the EIN to identify the employer in electronic transactions. They would incur implementation costs for converting systems from other employer identifiers to the EIN. Some health care providers would incur those costs directly and others would incur them in the form of fee increases from billing agents and health care clearinghouses.
b. Health care plans.
Health care plans that engage in electronic commerce would have to modify their systems to use the EIN if they do not currently use the EIN to identify the employer in electronic transactions that require an employer identifier. In most cases health care plans currently obtain and use the EIN of the employer in those transactions that require an employer identifier. The conversion for health plans currently using an employer identifier other than the EIN would have a one-time cost impact.
c. Health care clearinghouses.
Health care clearinghouses would have to modify their systems to transmit the EIN if they do not currently use the EIN to identify the employer in electronic transactions that require an employer identifier. In most cases health care clearinghouses currently obtain and use the EIN of the employer in those transactions that require an employer identifier. The conversion for health care clearinghouses currently using an employer identifier other than the EIN would have a one-time cost impact.
Each employer would have to disclose its EIN, when requested, to any entity that conducts standard electronic transactions that require the employer’s identifier. Entities that conduct electronic transactions that require an employer identifier commonly obtain that identifier from the employer as a normal business practice. This practice would not change. Any impact on employers would be the one-time impact to disclose the EIN to entities that have previously used a different identifier for that individual.
2. Effects of Various Options
a. Guiding Principles for Standard Selection
The implementation teams charged with designating standards under the statute have defined, with significant input from the health care industry, a set of common criteria for evaluating potential standards. These criteria are based on direct specifications in the HIPAA, the purpose of the law, and principles that support the regulatory philosophy set forth in Executive Order 12866 of September 30, 1993, and the Paperwork Reduction Act of 1995. In order to be designated as a standard, a proposed standard should:
- Improve the efficiency and effectiveness of the health care system by leading to cost reductions for or improvements in benefits from electronic HIPAA health care transactions. This principle supports the regulatory goals of cost-effectiveness and avoidance of burden.
- Meet the needs of the health data standards user community, particularly health care providers, health plans, and health care clearinghouses. This principle supports the regulatory goal of cost-effectiveness.
- Be consistent and uniform with the other HIPAA standards -- their data element definitions and codes and their privacy and security requirements -- and, secondarily, with other private and public sector health data standards. This principle supports the regulatory goals of consistency and avoidance of incompatibility, and it establishes a performance objective for the standard.
- Have low additional development and implementation costs relative to the benefits of using the standard. This principle supports the regulatory goals of cost-effectiveness and avoidance of burden.
- Be supported by an ANSI-accredited standards developing organization or other private or public organization that will ensure continuity and efficient updating of the standard over time. This principle supports the regulatory goal of predictability.
- Have timely development, testing, implementation, and updating procedures to achieve administrative simplification benefits faster. This principle establishes a performance objective for the standard.
- Be technologically independent of the computer platforms and transmission protocols used in HIPAA health transactions, except when it is explicitly part of the standard. This principle establishes a performance objective for the standard and supports the regulatory goal of flexibility.
- Be precise and unambiguous, but as simple as possible. This principle supports the regulatory goals of predictability and simplicity.
- Keep data collection and paperwork burdens on users as low as is feasible. This principle supports the regulatory goals of cost-effectiveness and avoidance of duplication and burden.
- Incorporate flexibility to adapt more easily to changes in the health care infrastructure (such as new services, organizations, and provider types) and information technology. This principle supports the regulatory goals of flexibility and encouragement of innovation.
We assessed the various options for an employer identifier against the principles listed above, with the overall goal of achieving the maximum benefit for the least cost. We found that the EIN met all the principles. No other candidate employer identifier is in widespread use. No other candidate met a majority of the principles, especially those principles supporting the regulatory goal of cost-effectiveness. We are assessing the costs and benefits of the EIN, but we did not assess the costs and benefits of other identifier options, because they did not meet the guiding principles.
b. Need to Convert
All health care providers, health plans, and health care clearinghouses that do not currently use the EIN to identify the employer in electronic health transactions that require an employer identifier would have to convert. Because the EIN is currently in widespread use as an employer identifier throughout the industry, adopting the EIN would not require conversion for most health care providers, health plans or health care clearinghouses. The selection of the EIN imposes a far smaller burden on the industry than any nonselected option and presents significant advantages in terms of cost-effectiveness, universality, and flexibility.
c. Complexity of Conversion
The EIN does not contain embedded intelligence. For those providers, health plans, and health care clearinghouses that must convert to use the EIN, the complexity of the conversion would be significantly affected by the degree to which their processing systems currently rely on intelligent employer identifiers. Converting from one unintelligent identifier to another is less complex than modifying software logic to obtain needed information from other data elements. However, the use of an unintelligent identifier like the EIN is required in order to meet the guiding principle of assuring flexibility.
In general, the shorter the identifier, the easier it is to implement. It is more likely that a shorter identifier, such as the EIN, would fit into existing data formats.
The selection of the EIN does not impose a greater burden on the industry in terms of the complexity of conversion than the nonselected options.
List of Subjects in 45 CFR Part 142
[Please label written and e-mailed comments about this section with the subject: Reg Text.]
Administrative practice and procedure, Health facilities, Health insurance, Hospitals, Medicaid, Medicare, Report and recordkeeping requirement.
Accordingly, 45 CFR subtitle A, subchapter B, would be amended by adding Part 142 to read as follows:
NOTE TO READER: This proposed rule is one of several proposed rules that are being published to implement the administrative simplification provisions of the Health Insurance Portability and Accountability Act of 1996, Public Law 104-191, 110 STAT. 2021. We propose to establish a new 45 CFR Part 142. Proposed Subpart A--General Provisions is exactly the same in each rule unless we have added new sections or definitions to incorporate additional general information. The subparts that follow relate to the specific provisions announced separately in each proposed rule. When we publish the first final rule, each subsequent final rule will revise or add to the text that is set out in the first final rule.
PART 142--ADMINISTRATIVE REQUIREMENTS
Subpart A--General Provisions
142.101 Statutory basis and purpose.
142.104 General requirements for health plans.
142.105 Compliance using a health care clearinghouse.
142.106 Effective date of a modification to a standard or implementation specification.
Subparts B--E [RESERVED]
Subpart F--National Employer Identifier Standard
142.602 National employer identifier standard.
142.604 Requirements: Health plans.
142.606 Requirements: Health care clearinghouses.
142.608 Requirements: Health care providers.
142.610 Requirements: Employers.
142.612 Effective dates of the initial implementation of the national employer identifier standard.
Authority: Sections 1173 and 1175 of the Social Security Act (42 U.S.C. 1320d-2 and 1320d-4).
Subpart A--General Provisions
§ 142.101 Statutory basis and purpose.
Sections 1171 through 1179 of the Social Security Act, 42 U.S.C. 1320d, as added by section 262 of the Health Insurance Portability and Accountability Act of 1996, require HHS to adopt national standards for the electronic exchange of health information in the health care system. The purpose of these sections is to promote administrative simplification.
§ 142.102 Applicability.
(a) The standards adopted or designated under this part apply, in whole or in part, to the following:
(1) A health plan.
(2) A health care clearinghouse when doing the following:
(i) Transmitting a standard transaction (as defined in § 142.103) to a health care provider or health plan.
(ii) Receiving a standard transaction from a health care provider or health plan.
(iii) Transmitting and receiving the standard transactions when interacting with another health care clearinghouse.
(3) A health care provider when transmitting an electronic transaction as defined in § 142.103.
(b) Means of compliance are stated in greater detail in § 142.105.
§ 142.103 Definitions.
For purposes of this part, the following definitions apply:
Code set means any set of codes used for encoding data elements, such as tables of terms, medical concepts, medical diagnostic codes, or medical procedure codes.
Employer means the following:
(1) The entity for whom an individual performs or performed any service, of whatever nature, as the employee of that entity except that:
(i) If the entity for whom the individual performs or performed the services does not have control of the payment of wages for those services, the term “employer” means the entity having control of the payment of the wages; and
(ii) In the case of an entity paying wages on behalf of a nonresident alien individual, foreign partnership, or foreign corporation, not engaged in trade or business within the United States, the term “employer” means that entity.
(2) Any entity acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan and includes a group or association of employers acting for an employer in that capacity.
Health care clearinghouse means a public or private entity that processes or facilitates the processing of nonstandard data elements of health information into standard data elements. The entity receives health care transactions from health care providers, health plans, other entities, or other clearinghouses, translates the data from a given format into one acceptable to the intended recipient, and forwards the processed transaction to the appropriate recipient. Billing services, repricing companies, community health management information systems, community health information systems, and “value-added” networks and switches that perform these functions are considered to be health care clearinghouses for purposes of this part.
Health care provider means a provider of services as defined in section 1861(u) of the Social Security Act, 42 U.S.C. 1395x, a provider of medical or other health services as defined in section 1861(s) of the Social Security Act, 42 U.S.C 1395x, and any other person who furnishes or bills and is paid for health care services or supplies in the normal course of business.
Health information means any information, whether oral or recorded in any form or medium, that--
(1) Is created or received by a health care provider, health plan, public health authority, employer, life insurer, school or university, or health care clearinghouse; and
(2) Relates to the past, present, or future physical or mental health or condition of an individual, the provision of health care to an individual, or the past, present, or future payment for the provision of health care to an individual.
Health plan means an individual or group plan that provides, or pays the cost of, medical care. Health plan includes the following, singly or in combination:
(1) Group health plan. Group health plan is an employee welfare benefit plan (as currently defined in section 3(1) of the Employee Retirement Income and Security Act of 1974, 29 U.S.C. 1002(1)), including insured and self-insured plans, to the extent that the plan provides medical care, including items and services paid for as medical care, to employees or their dependents directly or through insurance, or otherwise, and--
(i) Has 50 or more participants; or
(ii) Is administered by an entity other than the employer that established and maintains the plan.
(2) Health insurance issuer. A health insurance issuer is an insurance company, insurance service, or insurance organization that is licensed to engage in the business of insurance in a State and is subject to State law that regulates insurance.
(3) Health maintenance organization. A health maintenance organization is a Federally qualified health maintenance organization, an organization recognized as a health maintenance organization under State law, or a similar organization regulated for solvency under State law in the same manner and to the same extent as such a health maintenance organization.
(4) Part A or Part B of the Medicare program under title XVIII of the Social Security Act.
(5) The Medicaid program under title XIX of the Social Security Act.
(6) A Medicare supplemental policy (as defined in section 1882(g)(1) of the Social Security Act, 42 U.S.C. 1395ss).
(7) A long-term care policy, including a nursing home fixed-indemnity policy.
(8) An employee welfare benefit plan or any other arrangement that is established or maintained for the purpose of offering or providing health benefits to the employees of two or more employers.
(9) The health care program for active military personnel under title 10 of the United States Code.
(10) The veterans health care program under 38 U.S.C. chapter 17.
(11) The Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), as defined in 10 U.S.C. 1072(4).
(12) The Indian Health Service program under the Indian Health Care Improvement Act (25 U.S.C. 1601 et seq.).
(13) The Federal Employees Health Benefits Program under
5 U.S.C. chapter 89.
(14) Any other individual or group health plan, or combination thereof, that provides or pays for the cost of medical care.
Medical care means the diagnosis, cure, mitigation, treatment, or prevention of disease, or amounts paid for the purpose of affecting any body structure or function of the body; amounts paid for transportation primarily for and essential to these items; and amounts paid for insurance covering the items and the transportation specified in this definition.
Participant means any employee or former employee of an employer, or any member or former member of an employee organization, who is or may become eligible to receive a benefit of any type from an employee benefit plan that covers employees of that employer or members of such an organization, or whose beneficiaries may be eligible to receive any of these benefits. “Employee” includes an individual who is treated as an employee under section 401(c)(1) of the Internal Revenue Code of 1986 (26 U.S.C. 401(c)(1)).
Small health plan means a group health plan or an individual health plan with fewer than 50 participants.
Standard means a set of rules for a set of codes, data elements, transactions, or identifiers promulgated either by an organization accredited by the American National Standards Institute or HHS for the electronic transmission of health information.
Transaction means the exchange of information between two parties to carry out the financial and administrative activities related to health care. It includes the following:
(1) Health claims or equivalent encounter information.
(2) Health care payment and remittance advice.
(3) Coordination of benefits.
(4) Health claims status.
(5) Enrollment and disenrollment in a health plan.
(6) Eligibility for a health plan.
(7) Health plan premium payments.
(8) Referral certification and authorization.
(9) First report of injury.
(10) Health claims attachments.
(11) Other transactions as the Secretary may prescribe by regulation.
§ 142.104 General requirements for health plans.
If a person conducts a transaction (as defined in § 142.103) with a health plan as a standard transaction, the following apply:
(a) The health plan may not refuse to conduct the transaction as a standard transaction.
(b) The health plan may not delay the transaction or otherwise adversely affect, or attempt to adversely affect, the person or the transaction on the ground that the transaction is a standard transaction.
(c) The health information transmitted and received in connection with the transaction must be in the form of standard data elements of health information.
(d) A health plan that conducts transactions through an agent must assure that the agent meets all the requirements of this part that apply to the health plan.
§ 142.105 Compliance using a health care clearinghouse.
(a) Any person or other entity subject to the requirements of this part may meet the requirements to accept and transmit standard transactions by either--
(1) Transmitting and receiving standard data elements; or
(2) Submitting nonstandard data elements to a health care clearinghouse for processing into standard data elements and transmission by the health care clearinghouse and receiving standard data elements through the health care clearinghouse.
(b) The transmission, under contract, of nonstandard data elements between a health plan or a health care provider and its agent health care clearinghouse is not a violation of the requirements of this part.
§ 142.106 Effective date of a modification to a standard or implementation specification.
HHS may modify a standard or implementation specification after the first year in which HHS requires the standard or implementation specification to be used, but not more frequently than once every 12 months. If HHS adopts a modification to a standard or implementation specification, the implementation date of the modified standard or implementation specification may be no earlier than 180 days following the adoption of the modification. HHS determines the actual date, taking into account the time needed to comply due to the nature and extent of the modification. HHS may extend the time for compliance for small health plans.
Subparts B--E [Reserved]
Subpart F--National Employer Identifier Standard
§ 142.602 National employer identifier standard.
The employer identifier standard that must be used under this subpart is the employer identification number (EIN), which is the taxpayer identifying number of an individual or other entity (whether or not an employer) that is assigned pursuant to 26 U.S.C. 6011(b), or corresponding provisions of prior law, or pursuant to 26 U.S.C. 6109, and in which nine digits are separated by a hyphen, as follows: 00-0000000. The EIN is assigned by the Internal Revenue Service, U.S. Department of the Treasury.
§ 142.604 Requirements: Health plans.
Each health plan must accept and transmit the national employer identifier of any employer that must be identified by the national employer identifier in any standard transaction.
§ 142.606 Requirements: Health care clearinghouses.
Each health care clearinghouse must use the national employer identifier of any employer that must be identified by the national employer identifier in any standard transaction.
§ 142.608 Requirements: Health care providers.
Each health care provider must use the national employer identifier wherever required on all transactions the health care provider transmits electronically.
§ 142.610 Requirements: Employers.
Each employer must disclose its EIN, when requested, to any entity that conducts standard electronic transactions that require that employer’s identifier.
§ 142.612 Effective dates of the initial implementation of the national employer identifier standard.
(a) Health plans. (1) Each health plan that is not a small health plan must comply with the requirements of §§ 142.104 and 142.604 by [24 months after the effective date of the final rule in the Federal Register].
(2) Each small health plan must comply with the requirements of §§ 142.104 and 142.604 by [36 months after the effective date of the final rule in the Federal Register].
(b) Health care clearinghouses and health care providers. Each health care clearinghouse and health care provider must begin using the standard specified in § 142.602 by [24 months after the effective date of the final rule in the Federal Register].
Dated: April 17, 1998.
Donna E. Shalala
[FR Doc. 98-15782 Filed 6-15-98; 8:45 am]
BILLING CODE 4120-01-P