[Federal Register: February 20, 2003 (Volume 68, Number 34)]
[Rules and Regulations]
[Page 8381-8399]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20fe03-5]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of the Secretary
45 CFR Part 162
[CMS-0003-F and CMS-0005-F]
RINs 0938-AK64 and 0938-AK76
Health Insurance Reform: Modifications to Electronic Data
Transaction Standards and Code Sets
AGENCY: Office of the Secretary, HHS.
ACTION: Final rule.
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SUMMARY: In this final rule, we respond to public comments received and
finalize provisions applicable to electronic data transaction standards
from two related proposed rules published in the May 31, 2002, Federal
Register. We are also adopting proposed modifications to implementation
specifications for health care entities and others. In addition, we are
adopting modifications to implementation specifications for several
electronic transaction standards that were omitted from the May 31,
2002, proposed rules.
EFFECTIVE DATES: These regulations are effective on March 24, 2003. The
incorporation by reference of certain publications listed in this final
rule is approved by the Director of the Federal Register as of March
24, 2003.
FOR FURTHER INFORMATION CONTACT: Gladys Wheeler, (410) 786-0273.
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.
I. Background
A. Electronic Data Interchange
Electronic data interchange (EDI) refers to the electronic transfer
of information in a standard format between trading partners. When
compared with paper submissions, EDI can substantially lessen the time
and costs associated with receiving, processing, and storing documents.
The use of EDI can also eliminate inefficiencies and streamline
processing tasks, which can in turn result in less administrative
burden, lower operating costs, and improved overall data quality.
The health care industry recognizes the benefits of EDI, and many
entities in the industry have developed proprietary EDI formats.
However, with the increasing use of health care EDI standards, the lack
of common, industry-wide standards has emerged as a major obstacle to
realizing potential efficiency and savings.
B. Statutory and Regulatory Background
1. Statutory Background
The Congress included provisions to address the need for developing
a consistent framework for electronic transactions and other
administrative simplification issues in the Health Insurance
Portability and Accountability Act of 1996 (HIPAA), Pub. L. 104-191,
which became law on August 21, 1996. Through subtitle F of title II of
that statute, the Congress added to title XI of the Social Security Act
(the Act) a new part C, titled ``Administrative Simplification.'' The
purpose of this part is to improve the Medicare and Medicaid programs
in particular and the efficiency and effectiveness of the health care
system in general, by encouraging the development of standards and
requirements to enable the electronic exchange of certain health
information.
Part C of title XI consists of sections 1171 through 1179 of the
Act. Section 1172 of the Act and the implementing regulations make any
standard adopted under part C applicable to: (1) Health plans; (2)
health care clearinghouses; and (3) health care providers who transmit
any health information in electronic form in connection with a
transaction covered by 45 CFR part 162.
In general, section 1172 of the Act requires any standard adopted
by the Secretary of Health and Human Services (the Secretary) under
this part to be a standard that has been developed, adopted, or
modified by a standard setting organization (SSO). The Secretary may
adopt a different standard if the standard will substantially reduce
administrative costs to providers and health plans compared to the
alternatives, and the standard is promulgated in accordance with the
rulemaking procedures of subchapter III of chapter 5 of title 5, U.S.C.
Section 1172 of the Act also sets forth consultation requirements
that must be met before the Secretary may adopt standards. In the case
of a standard that is developed, adopted, or modified by an SSO, the
SSO must consult with the following Data Content Committees (DCCs) in
the course of the development, adoption, or modification of the
standard: The National Uniform Billing Committee (NUBC), the National
Uniform Claim Committee (NUCC), the Workgroup for Electronic Data
Interchange (WEDI), and the American Dental Association (ADA). In the
case of any other standard, the Secretary is required to consult with
each of the above-named groups before adopting the standard and must
also comply with the provisions of section 1172(f) of the Act regarding
consultation with the National Committee on Vital and Health Statistics
(NCVHS).
Section 1173 of the Act requires the Secretary to adopt standards
for transactions, and data elements for such transactions, to enable
the electronic exchange of health information. Section
[[Page 8382]]
1173 lists the transactions and sets out requirements for the specific
standards the Secretary is to adopt: Unique health identifiers, code
sets, security standards, electronic signatures, and transfer of
information among health plans.
Section 1174 of the Act permits the Secretary to make modifications
to any established standard after the first year, but not more
frequently than once every 12 months. It permits the Secretary to
modify an initial standard at any time during the first year of
adoption, if he determines that the modification is necessary to permit
compliance with the standard.
Section 1175 of the Act requires that covered entities comply with
modifications to standards or implementation specifications made after
initial adoption by stating that the Secretary will designate a
compliance date that may not be earlier than 180 days after the
modification is adopted.
We discussed HIPAA-specific legislation in greater detail in the
Transactions Rule (65 FR 50312) and the December 28, 2000, final rule,
Standards for Privacy of Individually Identifiable Health Information''
(65 FR 82462) (the Privacy Rule). Rather than repeating the discussion
in its entirety here, we refer the reader to those documents for
further information about EDI and the statutory background.
2. Regulatory Background
On May 7, 1998 (63 FR 25272), the Secretary proposed Standards for
Electronic Transactions and Code Sets. On August 17, 2000, the final
rule on Standards for Electronic Transactions and Code Sets was
published in the Federal Register (65 FR 50312). In the August 17,
2000, final rule, (the Transactions Rule), the Secretary adopted
standards for eight electronic transactions and six code sets. The
transactions are:
[sbull] Health Care Claims or Equivalent Encounter Information;
[sbull] Eligibility for a Health Plan;
[sbull] Referral Certification and Authorization;
[sbull] Health Care Claim Status;
[sbull] Enrollment and Disenrollment in a Health Plan;
[sbull] Health Care Payment and Remittance Advice;
[sbull] Health Plan Premium Payments; and
[sbull] Coordination of Benefits.
The code sets are: International Classification of Diseases, 9th
Edition, Clinical Modification, Volumes 1 and 2;
[sbull] International Classification of Diseases, 9th Edition,
Clinical Modification, Volume 3 Procedures;
[sbull] National Drug Codes;
[sbull] Code on Dental Procedures and Nomenclature;
[sbull] Health Care Financing Administration Common Procedure
Coding System; and
[sbull] Current Procedural Terminology, 4th Edition.
This final rule adopts modifications to the August 17, 2000
transaction and code set standards.
3. Statutory Requirements and Implementation Instructions for EDI
Standards
Section 1172(d) of the Act requires the Secretary to establish
specifications for implementing each adopted standard. However, because
the implementation instructions are voluminous, they were incorporated
by reference in the Transactions Rule. This approach, to incorporate by
reference, is commonly used by the Federal Register when external
organizations are tasked with developing standards that are
subsequently adopted as national standards. We are using this approach
in this final rule to adopt modifications to the specified standards
that were proposed in the May 31, 2002 proposed rules, CMS-0003-P (67
FR 38044) and CMS-0005-P (67 FR 38050).
C. Designated Standard Maintenance Organization (DSMO) Process
In our May 31, 2002, proposed rule, CMS-0005-P (67 FR 38050), we
described in detail the process used by the Designated Standard
Maintenance Organization (DSMO) Memorandum of Understanding (MOU) for
receiving, managing and processing requested changes to the adopted
standards. CMS-0005-P identified the six DSMOs and explained that we
had used the process specified in the MOU to develop the proposed
modifications to standards adopted in regulations. For ease of
reference, we have included the DSMO names and respective websites
below. Both of the SSOs (Accredited Standards Committee ASC X12N and
the National Council for Prescription Drug Programs (NCPDP)) that
develop standards adopted by the Secretary are DSMOs.
DSMO Names and Web site Addresses
[sbull] Accredited Standards Committee X12N (ASC X12N) (http://www.x12.org
).
[sbull] Health Level Seven, Inc. (HL 7) (http://www.hl7.org).
[sbull] National Council for Prescription Drug Programs (NCPDP)
(http://www.ncpdp.org).
[sbull] National Uniform Billing Committee (NUBC) (http://www.nubc.org
).
[sbull] National Uniform Claim Committee (NUCC) (http://www.nucc.org
).
[sbull] Dental Content Committee of the American Dental Association
(http://www.ada.org).
For additional information regarding the DSMO change request
process, see the MOU document, which is available at: www.hipaa-dsmo.org/mou.pdf
.
As we stated in CMS-0005-P (67 FR 38050), a significant number of
change requests were submitted through the DSMO process after the
initial EDI transaction standards were adopted in the regulations. Many
of those change requests were for changes that were considered by the
submitters to be essential to permit initial implementation of the
standards throughout the entire healthcare industry. Those change
requests addressed specific details or elements within the
implementation specifications.
Changes considered essential for implementation of the adopted
standards were reviewed by the DSMOs and assigned ``fast track'' status
for development within the authority of the DSMO process. (Other
changes that were not considered essential are going through the
general change request management process set forth in the MOU.) As
specified in the MOU, the DSMOs then presented those changes deemed
essential for initial implementation to the NCVHS. The NCVHS held
public hearings on those proposed changes (transcripts of those
hearings are available at http://www.ncvhs.hhs.gov). The NCVHS
recommended that the Secretary adopt all of the changes proposed by the
DSMOs as modifications to the national standards. Those changes are
reflected in the modifications to standards that are adopted by this
final rule.
II. Provisions of the May 31, 2002, Proposed Rules
In the May 31, 2002, Federal Register, we published two proposed
rules, CMS-0003-P (67 FR 38044) and CMS-0005-P (67 FR 38050). The two
proposed rules proposed to adopt as regulations certain modifications
to adopted standards.
The first proposed rule is entitled ``Modifications to Standards
for Electronic Transactions and Code Sets'' (67 FR 38044). Hereafter,
for the purposes of this final rule, we refer to this proposed rule as
CMS-0003-P. CMS-0003-P contained several proposed modifications that
pertained exclusively to revisions to certain electronic data
interchange (EDI) standards currently in effect for retail pharmacy
transactions and a repeal of the designation of National Drug Codes
(NDC) as the standard medical data code
[[Page 8383]]
set for reporting drugs and biologics on non-retail pharmacy standard
transactions.
The second proposed rule is entitled ``Modifications to
Transactions and Code Set Standards for Electronic Transactions'' (67
FR 38050). Hereafter, for the purposes of this final rule, we refer to
this proposed rule as CMS-0005-P. CMS-0005-P addressed proposals to
adopt limited technical changes to implementation specifications for
the transaction standards that were deemed necessary to implement
industry-wide EDI standards.
Because both of these proposed rules proposed modifications or
technical changes to standards that the Secretary of Health and Human
Services (the Secretary) adopted in the August 17, 2000, final rule
entitled ``Health Insurance Reform: Standards for Electronic
Transactions'' (65 FR 50312), we are combining them in this final rule.
Hereafter, for the purposes of this final rule, we refer to the August
17, 2000, final rule as the ``Transactions Rule.''
Specifically, in CMS-0003-P, we proposed to adopt the following:
[sbull] The National Council for Prescription Drug Programs (NCPDP)
Batch Standard Batch Implementation Guide, Version 1, Release 1
(Version 1.1), January 2000, for retail pharmacy drug claims,
eligibility, and coordination of benefits transactions, to replace the
earlier version (Version 1.0) that we had previously adopted in error.
In this final rule, we refer to this proposed standard as the ``NCPDP
Batch Implementation Guide Version 1.1.''
[sbull] The National Council for Prescription Drug Programs (NCPDP)
Batch Standard Batch Implementation Guide, Version 1, Release 1
(Version 1.1), January 2000, and the National Council for Prescription
Drug Programs (NCPDP) Telecommunication Standard Implementation Guide,
Version 5, Release 1 (Version 5.1), September 1999, for the referral
certification and authorization transaction, to replace the ASC X12N
278--Health Care Services Review standard. In this final rule, we refer
to these two proposed standards as the ``NCPDP Batch Implementation
Guide Version 1.1'' and the ``NCPDP Telecommunication Guide Version
5.1,'' respectively.
[sbull] ASC X12N 835--Health Care Claim Payment/Advice for the
retail pharmacy health care payment and remittance advice transaction,
to replace the NCPDP Batch Standard Batch Implementation Guide Version
1.0 and the NCPDP Telecommunication Guide Version 5.1.
[sbull] We also proposed to repeal the adoption of the National
Drug Code (NDC) as the standard for reporting drugs and biologics on
all transactions except retail pharmacy transactions, also termed
``non-retail pharmacy'' transactions below. This repeal would result in
there being no standard in place for reporting drugs and biologics on
non-retail pharmacy transactions.
III. Analysis of, and Responses to, Comments on the Proposed Rules
In response to the May 31, 2002, publication of the two proposed
rules, we received over 300 timely public comments. The comments came
from a variety of sources, including health care associations and
societies, entities named in the HIPAA legislation, health plans,
DSMOs, health care providers, Federal health plans, and private
individuals.
Our process of reviewing and associating like comments identified
areas of the proposed rules that required additional review in terms of
their effect on policy, consistency, or clarity of the modifications to
the standards, and areas that were technical and specifically related
to the implementation specifications. We consulted with the DSMOs on
technical comments that related specifically to the implementation
specifications.
We present comments and responses generally in the order in which
the proposals appeared in the May 31, 2002 proposed rules. We begin
with comments and responses about the compliance dates, and continue
with comments and responses on the proposals in CMS-0003-P (67 FR
38044), and those in CMS-0005-P (67 FR 38050).
A. Compliance Date
Under the Act, as reflected in Sec. 160.104, the Secretary
establishes the compliance date for modifications to standards. The
compliance date must not be earlier than 180 days after the effective
date of the adoption of the modification. We had not proposed a
compliance date in the proposed rules.
The Administrative Simplification Compliance Act (ASCA) (Pub. L.
107-105) was enacted on December 27, 2001. This law provided an
extension to the compliance date adopted in the Transactions Rule (65
FR 50312) for covered entities that submitted, by October 15, 2002,
plans to the Secretary indicating how they will come into compliance by
October 16, 2003. Small health plans were not provided with an
extension opportunity, but also have a compliance date of October 16,
2003. Because this final rule is modifying standards that are currently
in effect and with which compliance is otherwise required, ASCA is
relevant. ASCA did not address its effect on those covered entities
otherwise required to come into compliance by October 16, 2002, or how
modifications to standards were to be implemented.
Comment: Numerous commenters expressed support for the adoption of
the modifications and stressed the urgency for implementing the
modifications to meet compliance by October 16, 2003. We received some
comments requesting clarification for the processing of non-compliant
claims submitted before the compliance date of October 16, 2003, but
processed after October 16, 2003. A few commenters recommended
extensions of up to 90 days after October 16, 2003, to allow for an
orderly migration to the adopted modifications. The modifications to
the transactions are referred to collectively in this final rule as the
``Addenda.'' One commenter suggested that the Department of Health and
Human Services (HHS) establish a transition period as a precedent for
implementation of future transaction standard versions, such as ASC
X12N 4050. One commenter asked for clarification as to whether the ASCA
extension was for 1 year after the 180-day adoption period for the
Addenda. We received a few comments concerning the impact that
publication of this rule would have on the April 2003 ASCA HIPAA
testing requirements. One commenter suggested that HHS adopt the ASC
X12N 4050 Version implementation specifications, instead of the ASC
X12N 4010 Addenda.
Response: The effective date for this final rule is 30 days after
the date of publication in the Federal Register. Standards are adopted
and implementation specifications are established as of the effective
date of this final rule. Trading partner agreements should determine
the processing requirements for non-compliant claims submitted by
covered entities that have requested a compliance extension for the
period between October 16, 2002, and October 16, 2003.
To avoid confusion over the interaction between the compliance
dates for the original rule, the compliance dates for these
modifications, and the ASCA extension dates, we have revised the
regulations text at 45 CFR 162.900. Covered entities, other than small
health plans, that have timely submitted a compliance plan will be
required to come into compliance with the Transactions Rule as amended
[[Page 8384]]
by these modifications no later than October 16, 2003. ASCA, however,
complicates the compliance picture greatly.
Hundreds of thousands of entities, including numerous large health
plans, have obtained 1-year extensions under ASCA. Consequently, those
entities, as well as small health plans, are not required to conduct
covered transactions in standard form until October 16, 2003, as
clarified at section 162.900. Section 162.923 (a) provides that covered
entities must conduct transactions as standard transactions, except as
otherwise provided in part 162. Thus, we interpret Sec. 162.923(a),
when read with section 162.900, to mean that if both sides to a
transaction are not required to conduct it in standard form (that is,
if one side is required to conduct the transaction in standard form but
the other side is not), neither side is required to conduct it in
standard form, provided that the requirements to Sec. 162.925 do not
apply. Thus, for example, even where a covered health care provider
failed to submit a compliance plan, it would not be required to comply
with the Transactions Rule with respect to the covered transactions
which it actually conducts during the period of October 16, 2002,
through October 15, 2003, insofar as the transactions are with a health
plan that is not required to comply during this period because it (1)
has obtained a 1-year extension under ASCA, or (2) is a small health
plan. Similarly, a health plan that is subject to the October 16, 2002,
compliance date would not be required to conduct coordination of
benefits in standard form with another health plan, if the latter plan
was not conducting the transaction in standard form because it (1) has
obtained a 1-year extension under ASCA, or (2) is a small health plan.
Further, even where compliance is required (that is, the October
16, 2002, compliance date applies to both sides to the covered
transaction and neither covered entity submitted a compliance plan), we
recognize that the modifications adopted as a result of CMS-0003-P and
CMS-0005-P are necessary to permit the transactions covered by these
proposed rules to be conducted in standard form, and that such
transactions could not feasibly be required before the compliance date
for the modifications in this final rule, October 16, 2003. We will not
invoke our authority to penalize noncompliance with standards that our
own delay in issuing this final rule has made infeasible.
With respect to the remaining universe of transactions with which
compliance would otherwise be required, as between covered entities
that did not submit compliance plans, we recognize that covered
entities may find it difficult to determine which of their trading
partners must also comply in this interim year, and may in good faith
mistakenly assume that the other side to a transaction is exempted from
the compliance requirement. We also note that the failure to issue the
modifications below earlier has made testing of the standards between
trading partners difficult, if not infeasible. Also, complying with the
unmodified standards would result in implementation problems and divert
resources from complying with the modified standards, which will become
the industry standard in October 2003.
In light of these considerations, we have come to two decisions.
First, we are affording those covered entities that have a present
compliance obligation the opportunity to comply with either the
unmodified transaction standards or the modified transaction standards
in this interim 1-year period. This policy is reflected in Sec.
162.900(c)(1) below. Second, we intend to take into account the
numerous obstacles to compliance that exist and will work with covered
entities to bring them into compliance during this interim period,
through among other things, corrective action plans. We will reserve
our authority to penalize noncompliance for those cases of
noncompliance where such voluntary efforts fail or where covered
entities fail to make reasonable efforts to come into compliance.
The modifications proposed in the two proposed rules published on
May 31, 2002, and promulgated in this final rule were expressly
designed and adopted to assist compliance with the standards. These
modifications will, no doubt, greatly facilitate the process of
becoming compliant.
We accordingly believe that publication of this final rule and the
adopted revisions in the Addenda permit sufficient time to meet the
ASCA testing requirements for April 2003, and the October 16, 2003,
compliance date. Trading partner agreements should determine the
processing requirements for non-compliant claims submitted by covered
entities that have requested a compliance extension until October 16,
2003.
ASCA provided the option to obtain a 1-year extension to covered
entities, excluding small health plans. We have no statutory authority
to extend the compliance dates beyond this 1-year extension period. We
also believe that extending the compliance dates further, were we
permitted to do so, would place additional and unacceptable burdens on
covered entities that are compliant on schedule.
With regard to adopting the 4050 Version of the Implementation
Guides, it is our understanding that the healthcare industry is in the
midst of implementing the 4010 Version of the Implementation Guides.
Adopting a new version of the guides would unfairly burden those who
are completing the testing and implementation of the 4010 Version.
Also, when covered entities are fully functional with the 4010 Version
and its Addenda, they will have a better opportunity to assess
improvements for future versions of the Implementation Guides.
B. Responses to Comments on CMS-0003-P (67 FR 38044)
1. Retail Pharmacy Batch Transactions
In CMS-0003-P, we proposed that the Secretary adopt the NCPDP Batch
Implementation Guide Version 1.1, supporting NCPDP Telecommunication
Guide Version 5.1 for the NCPDP Data Record in the Detail Data Record.
Adopting this standard would enable covered entities conducting retail
pharmacy drug claims or equivalent encounter information, eligibility
for a health plan, and coordination of benefits transactions to be able
to submit transactions in batches.
We had intended to adopt the NCPDP Batch Implementation Guide
Version 1.1 in the Transactions Rule. However, an oversight resulted in
the adoption of a batch version that was not the equivalent companion
to the telecommunication standard that we adopted. The oversight, if
not corrected, would mean that retail pharmacy transactions could not
be batched. They would instead have to be submitted individually.
Comment: One commenter observed that the NCPDP Telecommunication
Guide Version 5.1 did not contain all the data elements required for
their health plan to process the claim.
Response: The NCPDP, which is the SSO that developed the NCPDP
Telecommunication Guide Version 5.1, has certified for us that the
standard does allow the reporting of information necessary to process
retail pharmacy drug claims. Because of the widespread support for this
transaction standard as expressed in the public comments received and
because of the assurance that essential data elements are present in
the NCPDP Telecommunication Guide Version 5.1, the Secretary is
[[Page 8385]]
adopting that standard in this final rule. That standard and the NCPDP
Batch Implementation Guide Version 1.1 are adopted for retail pharmacy
drug claims or equivalent encounter information (Sec. 162.1102),
eligibility for a health plan (Sec. 162.1202), and coordination of
benefits (Sec. 162.1802).
2. Referral Certification and Authorization Transaction
We proposed to adopt the NCPDP Batch Implementation Guide Version
1.1, supporting the NCPDP Telecommunication Guide Version 5.1, for the
NCPDP Data Record in the Detail Data Record, as the standard for the
referral certification and authorization transaction. Adopting this
standard would enable the reporting of all the data that are critical
to retail pharmacy prior authorization transactions. This standard
would replace the ASC X12N 278--Request for Review and Response
Transaction, which, according to information we received from the
retail pharmacy industry, does not support data that are critical to
retail pharmacy prior authorization transactions. The ASC X12N
standards development process for modifying standards could not be
completed in time to change the standard to make it useable for retail
pharmacy prior authorization transactions before the October 16, 2002,
compliance date for the Transactions Rule. The NCPDP standard
adequately supports this transaction for retail pharmacy, is currently
in widespread industry use, and the revised 278 would not present
significant advantages over it. We expect the NCPDP will continue to be
the standard in the future. This modification would not affect the
standard for dental, professional, and institutional referral
certification and authorization transactions, which is the ASC X12N 278
standard transaction.
Comment: One commenter asked if the standard would apply only to
retail pharmacy drug referral certifications and authorizations. The
commenter believed it should apply to all retail pharmacy referral
certifications and authorizations, including supplies.
Response: The standard would only apply to retail pharmacy drug
referral certification and authorization transactions.
All of the commenters supported this proposal. We are adopting in
this final rule the NCPDP Batch Implementation Guide Version 1.1 that
supports the NCPDP Telecommunication Version 5.1, as the referral
certification and authorization transaction standard for all retail
pharmacy drug claim certification and authorization transactions (Sec.
162.1302).
3. Health Care Claim Payment and Remittance Advice Transaction
In the May 31, 2002, proposed rule, we proposed to adopt the ASC
X12N 835--Health Care Claim Payment/Advice, Version 4010, May 2000, and
any adopted modifications to it, for retail pharmacy transactions.
Adopting this standard would enable health plans to generate HIPAA-
compliant remittance advice transactions for pharmacies. The NCPDP
standard format adopted by the Transactions Rule would not have the
capability of generating a per claim remittance advice transaction.
Comment: Several commenters pointed out that the proposed
provisions in Sec. 162.1602 list ``dental, professional, and
institutional health care claims and remittance advice'' and
recommended adding ``retail pharmacy'' to that list, or removing the
list entirely.
Response: We agree with these comments and note that the ASC X12N
835 is currently the standard for health care claims payment and
remittance advice for dental, professional, and institutional claims.
Adopting the ASC X12N 835 for retail pharmacy health care claims
payment and remittance advice would mean that it would be the standard
for all types of health care claims. Therefore, there would be no need
to include a list that specifies the applicable claims transactions. In
this final rule, we are removing the list at Sec. 162.1602.
Comment: A commenter suggested that pharmacies should not have to
implement both ASC X12N and NCPDP standards at this time, and that at
some point after the compliance date, future harmonization may be
practical.
Response: Many entities today use the formats of more than one
Standards Development Organization (SDO) for the electronic
transactions they conduct. In addition, many entities are preparing to
do so to comply with regulations. In this situation, however, the NCPDP
format does not adequately support the health care payment and
remittance advice transaction.
The majority of commenters who submitted comments on this proposal
supported the adoption of the ASC X12N 835 for this standard, including
three major pharmacy organizations. Therefore, in this final rule, we
are adopting the ASC X12N 835--Health Care Claim Payment/Advice as the
standard for retail pharmacy health care payment and remittance advice
(Sec. 162.1602).
4. National Drug Codes (NDC) Code Set
In CMS-0003-P, we proposed to repeal the National Drug Codes (NDC)
as the standard medical data code set for reporting drugs and biologics
in institutional, professional, and dental claims (that is, in non-
retail pharmacy drug claims). (Drugs are not reported in the adopted
standard dental claim transaction.) This repeal would leave no standard
in place for use in reporting drugs and biologics on those claims. A
health plan could require a provider to use any one of the applicable
code sets permitted by the Implementation Guides for that purpose.
The NDC code set is maintained by the Food and Drug Administration
(FDA) within HHS. It is required for use on the NCPDP claim format,
which is the standard for retail pharmacy drug claims. Retail
pharmacies have traditionally used the NDC. However, currently in the
professional and institutional health care sectors, the NDC is used
much less often. The primary code set used for reporting drugs and
biologics in those sectors is the Healthcare Common Procedure Coding
System (HCPCS) \1\. In the Transactions Rule, the Secretary adopted the
NDC as the standard for reporting drugs and biologics on all claims.
The Secretary adopted HCPCS codes as the standard for reporting
supplies and orthotic and prosthetic devices and durable medical
equipment, and, in combination with the Current Procedure Terminology,
Fourth Edition, for reporting physician and numerous other health care
services, on all claims.
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\1\ When the name of the Health Care Financing Administration
was changed to the Centers for Medicare & Medicaid Services in 2001,
the name of this coding system was changed from the ``Health Care
Financing Administration Procedure Coding System'' to the
``Healthcare Common Procedure Coding System.''
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HCPCS codes are grouped in ``series.'' Each series begins with an
alpha character, and similar items are usually grouped under the same
single or multiple series. The ``J series'' is comprised of drugs,
primarily generic drugs, and traditionally these drugs have been
limited to drugs that are payable under the Medicare program. Several
drug codes, however, are present in other HCPCS series for reasons that
are not relevant to this discussion. The NDC, on the other hand, is
currently assigned to drugs subject to listing requirements under
section 510 of the Federal Food, Drug, and Cosmetic Act. The NDC is
assigned to generic as well as brand name drugs. HCPCS codes are five
positions in length, whereas the NDC adopted by the Transactions Rule,
was originally developed as a 10-digit
[[Page 8386]]
identifier and, when used in computer systems, may yield an 11-digit
number.
With the adoption of the NDC as the standard, the HCPCS codes would
not be permitted to be used in a HIPAA-compliant transaction, because
the NDC would be the adopted standard for reporting drugs and
biologics.
There have been many discussions about the use of the NDC in
professional and institutional claims since publication of the
Transactions Rule. Many members of the professional and institutional
sectors did not believe that the NDC should be used on their claims.
The NCVHS held hearings and heard the testimony of members of the
health care industry on this issue. Information provided in that
testimony led us to develop the proposal to repeal the NDC as the
standard for reporting drugs and biologics on all but retail pharmacy
drug claims. In CMS-0003-P (67 FR 38044), we explained why the
Secretary adopted the NDC and why the Secretary was proposing the
repeal.
CMS-0003-P (67 FR 38044) also solicited comments on an alternative
proposal to adopt an alternative standard--in place of the NDC, to be
used to report drugs and biologics on non-retail pharmacy transactions.
We proposed that the HCPCS code set be the alternative standard. Below
we discuss comments on the proposal to repeal the NDC and the proposal
to adopt an alternative standard for non-retail pharmacy transactions.
We received approximately 200 comments on this issue. The comments
fell into three major categories: (1) Repeal the NDC as the standard
medical data code set for professional, institutional, and dental
claims and have no standard code set; (2) repeal the NDC, but adopt
HCPCS as the standard code set; and (3) retain the NDC as the sole
standard code set for claims from all sectors.
Comment: A number of commenters supported our proposal to repeal
the NDC and adopt no standard in its place. These commenters, many of
which were major health care industry organizations, indicated the
following: (1) The current Implementation Guide usage of the NDC should
remain constant and the Implementation Guide should define when the NDC
would be used; (2) if no code set was selected, the Implementation
Guides should not permit payers to require providers to use local code
sets for drugs and biologics; (3) the cost of converting to the NDC was
very high and would not justify the benefits, if any; and (4) not
naming a standard would give the industry time to fully evaluate
current practices and identify preferred alternatives.
Conversely, the proposed repeal was not favored by some Medicaid
State agencies, as they are required to use the NDC to report drugs and
biologics to receive drug rebates.
Response: We agree that repealing the NDC and having no standard
would be responsive to the needs of health plans and health care
providers who want to evaluate further the use of NDC. The absence of a
standard would permit the use of any codes as long as that use is
supported by the Implementation Guide for the transaction. Repealing
the NDC and having no standard would also address the concerns of many
health care providers who cited the high cost and low benefit of
conversion; they could continue to use HCPCS codes. Having no standard
would allow many health care entities to continue their current coding
practices, reducing the implementation burden, and would accommodate
State agencies' requirement to report NDCs for drug rebate programs.
Additionally, if there were no standard, the selection of the code set
to be used would likely be specified by health plans via trading
partner agreements, as long as the Implementation Guides permitted that
selection.
Comment: The majority of commenters supported the repeal of the NDC
and the adoption of HCPCS as the sole standard for reporting drugs and
biologics on non-retail pharmacy transactions. Many of these commenters
were institutional providers. They indicated that drug information,
which is often not reported on institutional claims, is rarely used to
compute payment because claims are usually paid under prospective
payment systems. Since drugs are rarely reported on institutional
claims, institutional healthcare providers would derive no benefit from
the expensive transition from HCPCS codes to the NDC.
Response: Repealing NDC and adopting HCPCS as the standard would
allay the concerns of some health care providers that more health plans
might decide to implement the NDC at some point in the future. However,
adopting HCPCS as the sole standard would not respond to the needs of
health plans and health care providers where the specificity of the NDC
is needed to compute payment or collect drug rebates.
Comment: Other commenters supported retaining the NDC as the
standard for reporting drugs and biologics on non-retail pharmacy drug
claims. Much of the support for retaining the NDC came on behalf of
State Medicaid agencies, which must use the NDC in order to receive
drug rebates.
Response: As we have indicated, the NDC retains certain advantages
over HCPCS, such as in the area of computing payments and collecting
drug rebates. Additionally, the NDC enables health care providers and
health plans to track effectively the utilization of drugs and access
certain manufacturer information regarding the drugs. We also
acknowledge that State Medicaid agencies have strongly encouraged
retaining the NDC for reporting drugs and biologics on non-retail
pharmacy drug claims. Retaining the NDC, therefore, as the standard
would respond to the needs of health plans and health care providers
who need specificity in computing payments and collecting drug rebates.
It would also foster consistent drug coding for claims and among health
care providers.
Simply retaining the NDC as the sole standard, however, would not
adequately respond to the express concerns of those health care
providers who commented that the cost of conversion to NDC would be
high while the benefits would be low or non-existent. Moreover, the
majority of commenters did not support keeping the NDC as the sole
standard for reporting drugs and biologics for non-retail pharmacy
sectors. We concluded that adopting either the NDC or the HCPCS would
fail to address many of the concerns raised.
In our considerations, we recognized that both the NDC and HCPCS
remain two of the most prevalent and useful code sets for reporting
drugs and biologics in non-retail pharmacy transactions. The benefits
of each code set complement the other's advantages very well.
We therefore decided, as we had proposed in CMS-0003-P, to repeal
the adoption of the NDC for institutional and professional claims,
while allowing the NDC to remain the standard medical data code set for
reporting drugs and biologics for retail pharmacy claims. We believe
that this decision best addresses the majority of comments received, in
that for institutional and professional claims, the choice of code set
will continue to be governed by trading partner agreements. However, we
wish to stress that the intent of this decision is to give covered
entities the full range of choices in determining which code set to use
with respect to these claims, including the HCPCS and NDC codes that
have been adopted as standards for other uses. Covered entities that
use HCPCS should utilize the established process for requesting new
codes, rather
[[Page 8387]]
than supplementing the code sets with locally developed codes.
The result of this repeal will be that there is no identified
standard medical data code set in place for reporting drugs and
biologics on non-retail pharmacy transactions. The absence of a code
set would not preclude the use of NDC for reporting drugs and biologics
by covered entities on standard transactions. Covered entities could
continue to report drugs and biologics as they prefer and agree upon
with their trading partners.
Comments from the different parts of the industry demonstrated that
no one code set is able to meet the different needs now addressed by
the NDC and HCPCS. Adopting no standard at this point will allow for
innovation, and permit development of new coding systems that meet the
full range of business needs. Comments also indicated that the costs
for a hospital or other institution to comply with the NDC for
reporting drugs and biologics on institutional claims could exceed its
costs for adopting all other HIPAA transaction standards. For many
health care providers, entire claim systems would need to be replaced,
re-engineered, or both.
We also considered the concerns expressed by the NUBC regarding the
use of the NDC on institutional claims, including hospital claims. NUBC
has indicated that reporting specific drugs on institutional claims
introduces a systems technology requirement that is inconsistent with
inpatient claims submission and institutional provider reimbursement,
which are typically based on a Diagnosis-Related Group or per diem
payment methodology. The NUBC has also expressed its belief that the
NDC coding system is more suited for inventory control and is not
appropriate for institutional provider billing, and further that the
NDC pertains to retail pharmacy claims only and should not be
applicable to institutional claims.
We are also aware that retaining the NDC as the sole standard for
institutional claims would pose significant operational issues on
institutional pharmacies because of systems incompatibility among the
pharmacies, inpatient medical records, and inpatient accounting
systems. Physicians generally order drugs for patients through the
hospital pharmacy department by name, unit, and dosage frequency. The
pharmacy department however does not reference the NDC to initiate the
charge transaction. Additionally, the NDC formats do not provide
information related to actual dosages administered, or provide a
methodology for multiple billing increments. Attempts by the industry
to develop a complete crosswalk from the current HCPCS codes to the NDC
have been unsuccessful.
Another important factor in our decision, as we mentioned in CMS-
0003-P, was the information we received from the Subcommittee on
Standards and Security of the NCVHS as a result of the public hearings
it held on February 1, 2001, regarding HIPAA implementation issues and
the NDC. In addition to the problems we identified above, concerns
expressed during that meeting included the burden of training
additional ancillary staff to use the NDC and the potential for
increases in medical errors when new system interfaces for drug
dispensing systems are created.
The NCVHS in a February 22, 2001, letter to the Secretary
recommended that the Secretary repeal the adoption of the NDC as the
standard medical data code set for reporting drugs and biologics in
standard transactions other than retail pharmacy transactions. It also
suggested that HCPCS codes as well as the NDC continue to be used in
the standard institutional and professional claim transactions.
Moreover, the NCVHS explained that it believes that no drug coding
system in existence today meets all the needs of the health care
industry. A future coding system that could be used effectively and
efficiently for drug inventory, pharmacy transactions, patient care,
billing arenas, and ensuring patient safety would be the best answer to
this problem, according to the NCVHS.
We note therefore that another significant advantage to repealing
the adoption of the NDC for reporting drugs and biologics in non-retail
pharmacy standard transactions and not adopting a replacement standard
code set at this time is that the industry and HHS will have time to
explore the development of a new drug coding system to meet current and
future needs of this sector of the health care industry. We would note
that the Implementation Guides for institutional and professional claim
transactions currently recognize the use of only the NDC and HCPCS
codes for drugs and biologics. See the discussion at section G.2 below.
The developer of a new code set could request that it be included in
the guides via the DSMO maintenance process.
Thus, based on comments received and our own review of the
available code sets, we believe that our decision to repeal the
adoption of the NDC as the standard medical data code set for reporting
drugs and biologics in all non-retail pharmacy transactions is the best
and most appropriate decision at this time. Repealing the NDC as the
standard medical code set for reporting drugs and biologics in non-
retail pharmacy transactions also raises opportunities for the
development of a more robust drug coding system that overcomes the
deficiencies inherent in the NDC and HCPCS codes for reporting drugs
and biologics on standard transactions. For example, because of the
inadequacy of existing codes for drug products, and the need for
harmonization of medical terminology, the FDA has been working with the
National Library of Medicine and the Department of Veterans Affairs to
develop improved drug codes.
In preparing this final rule, we consulted with the FDA and noted
that the FDA is preparing two new regulations that relate to the use of
the NDC number that will be proposed for public comment soon. Both
proposed rules will propose changes related to coordinating the NDC
with bar coding. It is expected that the proposed changes will make the
NDC number more useful to those who choose to use the NDC.
5. Retail Pharmacy Drug Claims
The Transactions Rule adopted the NCPDP transaction as the standard
for retail pharmacy drug claims (Sec. 162.1102(a)), and the ASC X12N
837--Professional Health Care Claim as the standard for professional
services (Sec. 162.1102(c)). Neither of our May 31, 2002, proposed
rules solicited comments on the formats to be used by retail pharmacies
when submitting claims for drugs, supplies, durable medical equipment,
prosthetics, orthotics, and professional services.
The DSMOs are currently discussing this item in their consideration
of two pending change requests that were introduced into the DSMO
process within the past year. (These requests were not submitted in
time to be considered under the ``fast track'' approach described in
this final rule in section I. C., ``Designated Standard Maintenance
Organization (DSMO) Process.'')
In submitting comments on issues presented in our two May 31, 2002,
proposed rules, some commenters included comments on the formats for
retail pharmacy drug claims for items and services other than drugs.
Such items included syringes, which are supplies that are usually
purchased with drugs such as insulin. Services included consultations
with patients and the administration of vaccines (such as the influenza
vaccine) to individuals. The issue of the format on which retail
pharmacy supply claims should be billed is tied closely to business
[[Page 8388]]
practices of retail pharmacies and the administration of pharmacy and
medical benefits by health plans. The Transactions Rule adopted a
standard for retail pharmacy drug claims, and adopted standards for
professional, institutional, and dental claims. It did not state
specifically, except with respect to retail pharmacies using the NCPDP
claim format, the particular types of health care providers that would
use the professional and institutional ASC X12N 837 standard claim
formats. The Implementation Guides themselves do not specify the types
of health care providers that are expected to use those standards.
Commenters requested additional clarification of the formats (the
implementation specifications) to be used by retail pharmacies in
submitting claims for supplies and professional services. Below are
specific comments and our responses.
Comment: We received comments requesting that the Secretary adopt
the NCPDP format for retail pharmacy supplies and services. We also
received some comments requesting that the Secretary adopt both the
NCPDP format and the ASC X12N 837 format for submitting claims for
supplies and services furnished by retail pharmacies, and allow the
type of benefit (pharmacy or medical) to determine which format would
be used. Commenters stated that splitting claims by billing drugs using
the NCPDP format and supplies using the ASC X12N 837 Professional
format was burdensome, and that the real-time functionality achieved
with the NCPDP format could not be used for billing the supplies that
are furnished in conjunction with dispensing the drug. We received
conflicting comments regarding the billing of professional pharmacy
services using the NCPDP format. These commenters preferred using the
ASC X12N 837 Professional claim for billing professional pharmacy
services.
Response: The commenters expressed differing business needs and
concerns. Some commenters included supporting rationale and
justifications, while others did not. It is apparent that much
information still needs to be obtained and analyzed before we consider
modifying the standards published in the Transactions Rule. We are
aware that the comments do not represent a complete picture of the
industry because we did not solicit comments specifically on this
issue. Since formats for billing retail pharmacy supplies and
professional services were not proposed in CMS-0005-P (67 FR 38050), or
CMS-0003-P (67 FR 38044), many people who may have information
pertinent to this issue did not comment on it.
Comment: Approximately one-third of the commenters stated that the
NCPDP format should not be used by retail pharmacies to submit claims
for professional services; they did not provide supporting rationale.
Response: The NCPDP format is not used extensively by retail
pharmacies to bill for professional services. Many retail pharmacies
currently use the CMS-1500 ``Health Insurance Claim'' (the professional
paper claim) in submitting claims for professional services.
Comment: Some commenters indicated that a more consistent and
effective approach would be for retail pharmacies to use the NCPDP
format for all claims, regardless of the type of service. Some
commenters also elaborated on the benefits of NCPDP's real-time
transaction.
Response: This approach would benefit retail pharmacies, which
currently use the NCPDP format. However, the Transactions Rule states
that claims for drugs are to use the NCPDP claims transaction. This
means that retail pharmacy claims that are not for drugs are to use the
ASC X12N 837 Professional claims transaction.
Comment: Other commenters believed that both the NCPDP and the ASC
X12N formats should be used by retail pharmacies. Some of these
commenters stated that drug claims and claims for supplies that are
closely related should continue to be billed on the NCPDP format, and
that claims for professional services and supplies that are not tied to
drugs should be billed on the ASC X12N 837 Professional, which is the
adopted standard for claims for supplies and professional services, and
is the transaction standard that other health care providers will use
for these types of claims. Several of these commenters indicated that
the NCPDP format should be used for claims that fall under pharmacy
benefits, and the ASC X12N 837 Professional format should be used for
claims that fall under medical benefits. Some commenters expressed
concern about the lack of clear industry guidelines for determining
pharmacy benefits and medical benefits. Others stated that both formats
should be adopted, and that health plans should determine the
situations for the use of each.
Response: The Transactions Rule adopts in Sec. 162.1102(a) the
NCPDP format for retail pharmacy drug claims and the ASC X12N 837
Professional claim format for claims for supplies and professional
services. The Transactions Rule does not specify the items or services
that would be billed on the ASC X12N 837 Professional claim. We will be
providing additional guidance by other means on this issue.
C. Proposal to Adopt Modifications to the Standards Adopted in the
Transactions Rule
We proposed in CMS-0005-P (67 FR 38050) to adopt modifications to
certain standards adopted in the Transactions Rule (65 FR 50312). The
modifications we proposed were the result of the DSMO process to
maintain standards adopted by the Secretary and to process requests for
adopting new standards or modifying adopted standards. (The DSMO
process is described in section I. C. of this rule.)
The versions of the Addenda adopted in this final rule are
referenced by the suffix ``A1'' and dated October 2002. It is important
to note that these versions become final with publication of this final
rule. Consequently, the October 2001 date is revised to October 2002 to
reflect the final versions of the adopted Addenda.
D. Composition of the Addenda
Addenda are defined as modifications to items in the implementation
specifications that could be considered impediments to implementation.
They are first published in draft form and go through the rulemaking
process before becoming final.
Two hundred thirty-one change requests were submitted to the DSMOs
for consideration. Eighty-five were returned to submitters because the
Implementation Guides already met the specific business need, or the
need was not well substantiated; 21 were determined to be unnecessary
for initial implementation and were, therefore, recommended for future
changes; six were withdrawn by their submitters; and seven were
referred to the Secretary as policy issues requiring resolution. The
remaining 115 change requests were approved by the DSMOs and comprise
the various Addenda.
Forty-eight of the 115 change requests were maintenance items to
correct minor errors, or provide clarifications in the standards.
Maintenance changes are technical corrections made by DSMOs to correct
typographical errors or other non-substantive changes. Maintenance
changes exclude activities related to the adoption of a new standard or
implementation specification or modification to an adopted standard or
implementation specification. Maintenance changes are typically changes
that are obvious to readers of the Implementation Guides, are not
controversial, and are essential to
[[Page 8389]]
implementation. These maintenance items are the result of DSMO change
requests that were approved and recommended for adoption via the DSMO
process. Therefore, we are not including a discussion of them in this
final rule.
The remaining 67 of the 115 change requests were for substantive
modifications to the standards, and they are detailed below.
E. Proposed Modifications to the Standards
[sbull] Changing usage of data elements from required to
situational (about 20 percent of total requested changes).
Required usage of data elements means that particular data elements
must be used every time the transaction is conducted. Situational usage
of data elements means that, when certain specified situations or
conditions exist, particular data elements must be used when the
transaction is conducted. Those who submitted DSMO change requests
pointed out several data elements for which the adopted standards
required usage in all cases, but that was only needed in certain
situations. Usage of these data elements was made situational in the
Addenda, with the situations explicitly defined. Examples follow:
1. Many health plans store Healthcare Provider Taxonomy Codes when
health care providers enroll in the health plan, so there is no need to
send this information on every claim. Healthcare Provider Taxonomy
Codes are data elements that identify the type, classification, and
specialization of providers furnishing health care. The NUCC maintains
these codes. The Washington Publishing Company makes the Healthcare
Provider Taxonomy Codes available on its Web site (http://www.wpc-edi.com
). The Healthcare Provider Taxonomy Codes now will be reported
only when claim adjudication is known to be impacted by the presence of
the code.
2. In another case, ``date last seen by physician'' (used for
certain physical therapy claims) is needed only by Medicare, so usage
was changed from required on all claims, to required ``when known to
impact the payer's adjudication process.''
[sbull] Removal of certain data elements (about 20 percent of
changes).
Several data elements were removed because they do not appear to be
needed by any covered entity.
[sbull] Allowing certain information to be reported via external
code sets rather than via data elements defined in the transaction
(about 20 percent of changes).
ZIP codes, maintained by the U.S. Postal Service, are an example of
an external code set. Revisions and updates for transaction data
elements adopted by the Transactions Rule must go through the DSMO
change request process, while revisions to external code sets require
requesters to submit requests to the organizations that maintain the
code sets and are not subject to the DSMO review process.
There were several instances where external code sets could be used
to indicate certain data elements. The replacement of data elements
with external code sets will allow the maintainers of those external
code sets to update the codes more easily, as opposed to having the
DSMOs make changes to the standards themselves. Two external code sets
adopted by the Addenda are special program indicator codes and newborn
birth weights.
[sbull] Adding additional functionality to some transactions (about
40 percent of changes).
Requesters suggested several additional data elements, codes, or
loops to enable them to perform certain business functions in the
transactions.
These included cross-referencing two subscriber IDs (surviving
spouse and dependents) and sending a patient's primary care physician
number.
F. Comments on the Modifications Included in the Addenda
CMS-0005-P (67 FR 38050) established the scope for technical
comments by limiting comments to only those items being added or
changed by the Addenda.
Numerous recommendations and suggestions submitted in the comments,
which were not considered critical for implementation, will be
considered for improvements or clarifications to future versions of the
implementation specifications.
Because the comments were technical in nature, relating to specific
data elements and segments, and applied to implementation
specifications that were developed and are maintained by external
organizations, such as the ASC X12N and the NCPDP, the Secretary could
not address all of them directly. Therefore, we analyzed the public
comments received to determine which comments fell in this technical
category. We consulted with representatives from each of the DSMOs on
these technical comments. Some of the technical comments were referred
to the external organizations that develop the standards, such as the
ASC X12N transaction workgroups, for additional review and
consultation.
Comments that did not pertain specifically to the proposed Addenda
were considered and determined to be more appropriately addressed
through the DSMO Change Request process.
The majority of comments we received generally supported adoption
of the proposed Addenda. Most commenters agreed that adopting these
proposed changes is necessary to permit successful initial
implementation of the standards within the industry. The Workgroup for
Electronic Data Interchange (WEDI), the American Hospital Association
(AHA), the National Uniform Claim Committee (NUCC), a number of
Medicaid State agencies, the Health Insurance Association of America
(HIAA), the Blue Cross Blue Shield Association (BCBSA), and the
American Medical Association (AMA) were among the numerous health care
providers, health plans, and professional organizations that submitted
comments expressing support for adoption of the proposed Addenda. Some
commenters suggested that work on the implementation specifications
continue in order to improve the clarity relating to specific
situational data elements and to ensure clear, consistent
interpretations and implementation by health plans.
Commenters unanimously supported many specific Addenda items, for
example:
[sbull] The proposal to use existing UB-92 Condition Codes for
reporting special program indicators, as well as UB-92 Value Codes to
report newborn birth weights. These changes would eliminate differences
in the way this information is handled for electronic and paper
submission of claims. It is important wherever possible to follow the
same data development paths for both paper and electronic submission in
order to simplify the capturing and reporting of billing information.
[sbull] The deletion of unneeded data segments and the
clarification of ambiguous usage notes.
We discuss other comments on specific modifications below. They are
organized according to specific adopted transaction standards.
The Addenda are not stand-alone documents. They are supplemental
implementation specifications to the initial standards adopted in the
Transactions Rule. In this final rule, we therefore adopt the Addenda
as part of the standards to which they apply.
G. Transaction Standard for Health Care Claims or Equivalent Encounter
Information
In CMS-0005-P (67 FR 38050), we proposed to adopt the following:
[[Page 8390]]
[sbull] Addenda to Health Care Claim: Dental, ASC X12N 837, Version
4010, October 2002, Washington Publishing Company, 004010X097A1.
[sbull] Addenda to Health Care Claim: Professional, Volumes 1 and
2, ASC X12N 837, Version 4010, October 2002, Washington Publishing
Company, 004010X098A1.
[sbull] Addenda to Health Care Claim: Institutional, Volumes 1 and
2, ASC X12N 837, Version 4010, October 2002, Washington Publishing
Company, 004010X096A1 as the standard for health care claims or
equivalent encounter information.
1. Transaction Standard for Health Care Claims or Equivalent Encounter
Information: Institutional
Comment: A number of commenters objected to the usage note in the
Addenda that requires reporting of HCPCS codes for all outpatient
claims, because some outpatient services do not have HCPCS codes
established for them. Commonly used revenue codes submitted without
HCPCS codes are 250 (pharmacy drugs), 270 (medical supplies), 370
(anesthesia supplies), 710 (recovery room), and 762 (observation).
HCPCS codes do not exist for many of these services. The commenters
noted that the use of unlisted (miscellaneous) HCPCS codes in
situations where a specific HCPCS code does not exist to describe the
service or supply could result in the rejection of an entire claim
because additional documentation is required for defining the unlisted
code. An increase in the use of unlisted codes for these situations
would cause significant claim processing delays and rework. Even though
there is no additional line-item payment for these revenue codes, they
must be submitted because Ambulatory Patient Classification (APC)
reimbursement values are calculated by looking at all of the services
submitted.
Response: We agree with these commenters that the Addenda proposal
to require the use of HCPCS codes on all outpatient claims did not
account for those services that do not have assigned HCPCS codes. The
usage note was modified by the ASC X12N to indicate that HCPCS codes
are only required to be reported for services when a HCPCS code exists
for that particular service.
Comment: Several commenters objected to the Addenda's removal of
the requirement for diagnosis information on ``Hospital Other'' bill
types. ``Other'' is defined by the NUBC as diagnostic services, or home
health services not under a plan of treatment. For example, a family
physician may send blood work to a hospital-based laboratory. The
hospital never sees the patient. Some health plans use this diagnosis
information to pay or reject claims based on whether a service is
medically necessary, experimental, or cosmetic. The adopted Addenda
modify the requirement for this diagnosis information by making its use
situational, with a note explaining that a diagnosis is not needed for
``Religious Non-Medical'' claims and ``Hospital Other'' bill types.
Response: The original transaction standards required this
diagnosis information on all inpatient and outpatient claims. The DSMO
change request for not requiring the diagnosis information on certain
types of claims was strongly supported by the industry because
principal diagnosis information is not needed for certain hospital bill
types. For example, when a physician sends a patient's blood work to a
hospital-based laboratory, the hospital will bill for those services
using the ``Hospital Other'' bill type. The hospital never sees the
patient and would have no record of the patient's principal diagnosis
information. We support the Addenda change to delete the requirement
for principal diagnosis information in all situations, since in many
cases obtaining this information creates an administrative burden when
it is not readily available and not used.
Comment: We received numerous comments on the Addenda's
institutional claim usage of Healthcare Provider Taxonomy Codes, which
identify the specialty of a health care provider that provided medical
services. In the implementation specification adopted in the
Transactions Rule, Healthcare Provider Taxonomy Code information usage
was required at the line level and the claim level for institutional
claims. The Addenda modify the required use of the Healthcare Provider
Taxonomy Code information at the line level and the claim level for
institutional claims by making its use situational. The situation that
would require its use is if the information is known to impact claim
adjudication. Commenters stated that hospitals often have many
caregivers involved in the delivery of a particular service, and that
it is impractical or impossible in many instances to report a single
Healthcare Provider Taxonomy Code or other associated provider
identification at the line level. To require such reporting would
impose a tremendous burden on hospitals to implement massive new system
changes to track which caregivers were responsible for providing each
individual service and to incur costs that would never be recouped
through payment differentials payers would assign to the service.
Commenters suggested that HHS follow the NUBC recommendation to delete
all references to the use of Healthcare Provider Taxonomy Codes from
the institutional claim Implementation Guides. However, other
commenters cited examples and reasons why Medicaid State agencies
require the taxonomy information, including determining appropriate
reimbursement, editing and auditing claims, routing data for State and
Federal reporting, and detecting fraud and abuse. Use of taxonomy
information on the institutional claim would allow Medicaid programs to
use the most up-to-date information available for claim pricing and
payment methodology reports. These commenters indicated that removing
taxonomy codes from institutional claims could impact health care
provider reimbursement and would involve complex policy changes for
Medicaid State agencies.
Response: After extensive deliberation on this issue and evaluation
of current business practices among institutional health care
providers, ASC X12N has removed the required usage of Healthcare
Provider Taxonomy Codes from most segments in the ASC X12N 837
Institutional Implementation Guide. We attempted to find specific
situations in the industry documenting the need for this particular
Healthcare Provider Taxonomy Code use. Only one health plan identified
a specific need for this information at the Billing/Pay To Provider
level for the institutional claim. Usage at this level will remain
situational to accommodate those business situations when Healthcare
Provider Taxonomy Code information is needed.
Comment: Numerous commenters requested that the requirement to
report physician name and ID number at the line level be eliminated.
The implementation specifications adopted by the Transactions Rule
established this requirement. The Addenda changes recommended by the
DSMOs modify the required usage to situational. The situation that
would require its use is if the information is known to impact claim
adjudication. According to current billing practices, an institutional
claim form summarizes services and supplies provided by a hospital
facility. The attending physician who has ultimate responsibility for
coordinating hospital services is reported at the claim level. Line
level reporting of each health care provider would be redundant since
individual professional services are separately billed according to
professional billing guidelines.
[[Page 8391]]
Response: After considerable discussion and evaluation of current
industry practices, we determined that this information is available,
but not currently required, on institutional claims. The implementation
specifications adopted by the Transactions Rule established the usage
of line level provider information as required when the provider
information at the line level was different from that at the claim
level. The Addenda for the implementation specifications modify the
usage of line level provider information from required to situational.
The specific situation when this information would be required is when
line level provider information is known to impact claim adjudication.
Comment: A few commenters noted that a usage change instruction for
Operating Physician Specialty Information points to an incorrect
segment.
Response: We agree with this comment. ASC X12N has made the
appropriate corrections and added this modification to the Addenda
adopted by this final rule.
2. Transaction Standard for Health Care Claims or Equivalent
Encounter Information: Professional
Comment: Several commenters stated that the implementation
specification requirement proposed for the use of the NDC conflicted
with the proposed regulation text for CMS-0003-P (67 FR 38044). In our
CMS-0003-P proposed rule, we proposed repealing the NDC for reporting
drugs and biologics on non-retail pharmacy transactions and that no
standard for reporting drugs and biologics on non-retail pharmacy
transactions be adopted at this time. CMS-0005-P (67 FR 38050) proposed
adoption of the Addenda that required usage of the NDC information when
necessary to add definition to a particular product. One commenter
suggested that this be clarified by adding a mutually defined ``ZZ''
qualifier to permit usage of any code sets based on trading partner
agreements.
Response: This final rule adopts the modified Addenda approved by
ASC X12N in October 2002. The Addenda permit use of either the NDC or
HCPCS to code drugs and biologics on non-retail pharmacy claims, but
(with limited exceptions) do not permit other codes to be used for this
purpose. However, this choice of either HCPCS or NDC codes is not
consistent with our decision, reflected in Sec. 162.1002(c) below, to
repeal the standard code set for drugs and biologics for non-retail
pharmacy transactions and to permit the use of all code sets in order
to encourage development of a single code set that will meet the needs
of the entire health care industry. We expect that the choice of either
the HCPCS or the NDC codes afforded by the Addenda will, in the usual
case, result in covered entities in the non-retail pharmacy sectors of
the industry continuing to code drugs and biologics as they do now,
whether by NDC or by HCPCS. The Addenda will thus not create a
disincentive for industry to develop, and migrate to, a single code set
for use by the industry.
Although we agree that in this respect the Addenda are not
consistent with our underlying policy choice regarding the code sets
for drugs and biologics for non-retail pharmacy transactions, the
adopted Addenda contain many important changes to the Implementation
Guides that are essential if industry is to be able to test and
implement the transactions in question smoothly and on time. Because we
cannot, under the statute, choose among provisions in an industry-
adopted standard guide without going through negotiated rule making,
the critical need for the remainder of the changes in the Addenda has
led us to adopt the Addenda in their present form. We intend, however,
to work with industry to align the Addenda with the policy reflected at
Sec. 162.1002(c) and adopt a further modification of the standards to
effect this alignment in the next update. Should we not be able to
reach agreement on the inconsistency between our policy decision and
the policy reflected in the Implementation Guides, we intend to pursue
our options under the statute that include negotiated rule making. We
recognize that the existence of what is, in effect, two standards for
coding drugs and biologics within the transactions in question may
cause problems between health plans and health care providers and may
in some cases result in noncompliance. It is unlikely that we would
pursue any such instances of noncompliance, in light of the competing
demands for enforcement resources and the inconsistency between our
policy decision and the policy reflected in the Implementation Guide.
With respect to the comment about ZZ codes, the adopted Addenda
only permit use of ZZ qualifiers for certain situations. Thus, the
problem discussed above likewise exists with respect to such codes, and
we adopt the same approach thereto.
Comment: One commenter listed three modifications that had been
approved by the DSMOs but were not included in the Addenda
specifications. These modifications related to Initial Treatment Date,
Spinal Manipulation Certifications for Medicare Part B, and the Test
Date for Dialysis Patients.
Response: We verified that these modifications were adopted in the
proposed Addenda but due to typographical errors were inadvertently not
included in the proposed Addenda. ASC X12N has corrected these errors
and added these modifications to the Addenda adopted by this final
rule.
Comment: We received many comments from anesthesiology providers
requesting that we not adopt the proposed usage instruction that allows
reporting anesthesia services in minutes only. Current business
practices require that reimbursement for anesthesia services be based
on total anesthesia time in minutes or units. Adopting this proposed
usage instruction in the Addenda would impact reimbursement
methodologies and payment amounts for anesthesia providers.
A number of commenters requested HHS to adopt a standard definition
for anesthesia time. A generally accepted definition for most payers,
including Medicare, that is consistent with the American Society of
Anesthesiologists' definition, defines anesthesia time as starting when
the practitioner begins to prepare the patient for anesthesia services
and ending when anesthesia services are no longer being provided and
the patient is safely in postoperative care. However, a minority of
payers account for anesthesia time differently, requiring multiple
reporting for face-to-face start and stop times, if there are different
clinical activities in a particular service. A commenter pointed out
that the sporadic need to depart from a widely accepted methodology is
burdensome and results in frequent reporting errors.
Response: We agree with the comment to delete the usage instruction
requiring the reporting of minutes only for anesthesia services. Based
upon various payment systems for anesthesia services that depend upon
reporting unit information on claims, and the various methods for
calculating one unit of time, we determined that adopting a standard
requiring that only minutes be reported would impact anesthesia
providers' ability to report their services adequately. Regarding the
request for a standard definition for anesthesia time, we believe that
the applicable comments actually seek further clarification of health
plans' reimbursement policies, which are not the subject of these
transaction standards.
Comment: Several commenters objected to a modification of the
requirement for spinal and non-spinal manipulation service information.
This
[[Page 8392]]
information was previously required on all spinal manipulation claims.
The Addenda limit this requirement to Medicare Part B chiropractic
claims. For some health plans, this information applies to contractual
benefit exclusions and is used to adjudicate claims. Since osteopathic
manipulation procedure codes can represent either spinal or non-spinal
manipulations, the spinal manipulation service information segment is
used by some health plans to distinguish between spinal and non-spinal
services.
Response: We agree with this comment. ASC X12N has added a usage
note to the Addenda adopted by this final rule to require the spinal
manipulation service information segment when needed for claim
adjudication.
Comment: Numerous commenters supported the Addenda modification
that changed the usage for Healthcare Provider Taxonomy Codes from
required to situational. However, one commenter suggested that usage of
Healthcare Provider Taxonomy Codes be completely removed from the
Professional claim Implementation Guide.
Response: Commenters generally supported the Addenda modification
for usage of the Healthcare Provider Taxonomy Codes from required to
situational. After extensive review and discussion of this topic, we
adopt the proposed Addenda's situational usage of Healthcare Provider
Taxonomy Codes on the Professional claim.
Comment: We received comments indicating that ``Date Last Seen''
information was required by a number of payers. The Addenda specified
that only Medicare required this information.
Response: We have confirmed that other health plans do need these
data. The Secretary adopts the ASC X12N modification for situational
usage of this date information when it impacts the health plan's claim
adjudication process.
Comment: One commenter requested that a description for the acronym
``EPSDT'' be added to the Implementation Guide.
Response: We believe that this information will clarify
Implementation Guide requirements. Accordingly, the acronym for Early
and Periodic Screening for Diagnosis and Treatment (``EPSDT'') and its
definition will be adopted. ASC X12N revised the Addenda to include
this clarification.
Comment: A number of commenters referenced variations in the use of
``performing provider'' and ``rendering provider'' information, and
questioned the different terminology.
Response: In the Addenda performing provider (PE) and rendering
provider (PR) are separate and distinct data elements. ``PE'' and
``PR'' have the same business meaning of identifying the provider who
furnishes a service. However, these data are named differently because
they are referenced in separate sections of the Implementation Guide.
``PE'' is used to denote the Performing Provider in the PRVO1 section.
``PR'' denotes the Rendering Provider at the Loop 2310 B segment.
3. Transaction Standard for Health Care Claims or Equivalent Encounter
Information: Dental
Comment: We received a number of comments requesting the use of
HCPCS modifier codes for dental claims. The commenters stated that
using HCPCS modifier codes improves the efficiency of processing
electronic dental claims by providing necessary detail and allowing
more accurate dental claim adjudication. Other commenters opposed the
use of HCPCS modifier codes with the adopted Code on Dental Procedures
and Nomenclature standard, stating that most dental billing systems do
not support procedure code modifiers. Those commenters pointed out that
the use of HCPCS modifier codes is likely to increase paper claims and
would perpetuate the current lack of code standardization for payment
purposes and undermine the goal of administrative simplification.
Response: The Code on Dental Procedures and Nomenclature (The
Code), as maintained and distributed by the American Dental Association
(ADA), is the adopted standard code set for reporting dental services.
Using HCPCS modifier codes for dental claims reporting would require
the adoption of an entire additional code set for standard dental
transactions, when only 20 to 30 modifiers are needed. We recognize
that no single code set in use today meets all of the business
requirements related to the full range of health care services and
conditions that exist, and that adopting multiple standards may be a
way to address code set inadequacies. Rather than adopt the HCPCS
modifier codes in addition to The Code for dental transactions, we
suggest working with The Code maintainers, the ADA, to develop and add
modifiers that will meet the needs of the dental industry. Dental
professionals and the public may submit requests at http://www.ada.org/prof/prac/manage/benefits/cdtform.html
.
Comment: We received one comment suggesting that the phrase ``for
services provided or proposed'' be added after Dental Health Care
Claims (Sec. 162.1102(b)). The ASC X12N 837 dental claim transaction
was designed and is used to submit a request for pre-determination and
pre-authorization of dental benefits. Since this function was not
identified in the Transactions Rule or in the Addenda, the submission
of an electronic inquiry for determining payment for proposed dental
services is not an adopted transaction standard. This commenter also
suggested that the word ``Dental'' be deleted from Sec. 162.1302(b),
Standard for Referral Certification and Authorization, dental,
professional, and institutional referral certification and
authorization 004010X094A1 because the adopted implementation
specification for ASC X12N 278 states that it is not intended for
dental pre-determination pricing, and that instead the ASC X12N 837
Dental transaction should be used for this purpose. The commenter also
stated that there is no existing or anticipated need for referral
certification and authorization using the ASC X12N 278 for dental
services. Dental systems support the ASC X12N 837 Dental for pre-
approval of dental benefits. We received conflicting comments from
Medicaid-identified commenters who expressed a need for using the ASC
X12N 278 for dental referral certification and authorization, and that
indicated that all dental systems do not completely support the ASC
X12N 837 Dental for pre-approval of dental benefits.
Response: We have determined that the ASC X12N 837 Dental claim is
commonly used by the dental industry for pre-determination and pricing
of dental services. This function does not meet the definition for the
Referral Certification and Authorization Transaction in the
Transactions Rule at Sec. 162.1301, and is not a transaction standard
adopted by the Transaction Rule, or proposed in CMS-0005-P.
Although not a HIPAA standard, pre-determination and pricing
functionality are available for use with the ASC X12N Dental claim.
However, ASC X12N has not adopted a standard response transaction for
use with this function. ASC X12N will be developing and modeling the
business use of the pre-determination and pricing transaction in
coordination with the DSMOs for future consideration as a transaction
standard and the subject of a later rule.
Based upon comments received, we also have determined that there is
an expressed business need for use of the ASC X12N 278 for dental
referral
[[Page 8393]]
certification and authorization. The word ``dental'' will remain in
Sec. 162.1302 so that use of ASC X12N 278 is available for referral
certification and authorization of dental transactions.
In summary, adding the phrase ``for Services Provided or Proposed''
to Sec. 162.1102(b) will not be adopted at this time. However, this
does not preclude use of the ASC X12N 837 Dental claim pre-
determination and pricing functionality. The ASC X12N 278 will remain
available for dental use of the Referral Certification and
Authorization Transaction. The dental industry will have available use
of the ASC X12N 278 adopted transaction standard for referral
certification and authorization transactions and the ASC X12N 837
Dental claim for pre-determination and pricing activities for which no
standard has been adopted.
Comment: A number of commenters disagreed with the Addenda
modification that added ``Assistant Surgeon'' and ``Rendering
Provider'' information to both the line level and the claim level for
dental claims. Commenters stated that tracking and reporting this
information would be an enormous burden for health care providers and
not conducive to administrative simplification.
Response: In order to reduce the administrative burden on health
care providers and prevent the potential confusion that could result
from sending or receiving a claim with both a ``Rendering Provider''
and an ``Assistant Surgeon'' at the same level, ASC X12N has added a
note to the Addenda instructing the user not to report the ``Assistant
Surgeon'' information when the ``Rendering Provider'' information is
reported at the line level of the claim.
Comment: We received a few comments supporting the Addenda
modification that changed the usage from required to situational for
Healthcare Provider Taxonomy Codes.
Response: The Addenda modified the use of the Healthcare Provider
Taxonomy Codes from required to situational on the dental claim.
Comment: One commenter indicated support for the Addenda and
specifically supported the addition of a new code set value in the
Addenda, ``service provider number,'' which the commenter maintained
was a necessary data element for managed care programs.
Response: This comment supports one of the Addenda modifications
adopted by this final rule that was required to permit initial
implementation of the standards. Adding the ``service provider number''
code set value is an example of a technical addition that better
defines the implementation specifications.
H. Transaction Standard for Eligibility for a Health Plan
We proposed adoption of the Addenda to Health Care Eligibility
Benefit Inquiry and Response, ASC X12N 270/271, Version 4010, October
2002, Washington Publishing Company, 004010X092A1 as the standard for
the dental, professional, and institutional health care eligibility
benefit inquiry and response transaction.
Comment: We received two comments that expressed support for
adoption of the Addenda to the ASC X12N 270/271 transaction.
Response: No additional comments or specific detailed requests were
received for these Addenda.
I. Transaction Standard for Referral Certification and Authorization
We proposed adoption of the Addenda to the Health Care Services
Review--Request for Review and Response, ASC X12N 278, Version 4010,
October 2002, Washington Publishing Company, 004010X094A1 for the
dental, professional, and institutional referral certification and
authorization transaction.
Comment: We received a number of comments about use of the Logical
Observation Identifier Names and Codes (LOINC TM). The
comments stated that use of this code set was confusing and requested
that the usage requirement be deleted or a clarifying note be added.
The Addenda state that this code set is not allowed for use under HIPAA
at this time. It is unclear why this code set would be included in the
Addenda if the code set is not an adopted standard code set.
Response: The LOINC TM code set was intended by the SSOs
to increase functionality of the transaction. It has not been adopted
as a national standard code set, but can be used in implementing this
transaction. The Addenda add the use of the LOINC TM code
set as an EDI option for responding to requests for additional
information when conducting the standard Referral Certification and
Authorization Transaction.
Comment: We received a number of comments suggesting that the
Addenda usage notes that allow attachment of electronic documentation
to this transaction were confusing because they appeared to conflict
with the Claims Attachment Transaction, mandated by HIPAA but not
adopted by the Secretary at this time.
Response: The Claims Attachment Transaction standard mandated by
HIPAA, but not adopted by the Secretary, is available for voluntary EDI
use from the Washington Publishing Company at the following Web site:
www.wpc-edi.com. The functionality of this transaction allows the
electronic transmission of documentation associated with a claim. It
can also function as a response for the Referral Certification and
Authorization Transaction, when additional information is requested.
The use of the electronic attachment with the Referral Certification
and Authorization Transaction is considered a two-way transaction: an
EDI request and its associated EDI response. Use with the claim
transaction can be either a one-way (required attachment is sent with
the claim and not as a response to a request), or a two-way
transaction. The Addenda do not require the provider to respond to this
request for additional information by using the Claims Attachment
Transaction. However, if the provider wants to respond using an EDI
transaction, the preferred method is the Claims Attachment Transaction.
We agree that further clarification on the circumstances when these
two transactions may be used is needed. ASC X12N has modified the
standard for the referral certification and authorization
implementation specification to illustrate the model use of these
transactions for other applications.
Comment: We received one comment that referenced the absence of a
needed segment regarding Dependent Detail information. The Dependent
Detail loop ID 2010DA for Dependent name 270 DTP date or time period is
not referenced in the Addenda. This segment is needed to convey
subscriber dependent information when the dependent is the patient.
Response: We agree that this is an error. ASC X12N has corrected it
in the adopted Addenda.
Comment: There were approximately 20 highly technical comments
relating to requests for clarification, missing elements, misspelling,
minor revisions, and improvements to the Implementation Guides.
Response: Because of their technical complexity, these comments
that involved modifications to specific loops and data elements in the
implementation specifications were referred to the ASC X12N Workgroup.
The following is a summary of these comments:
[sbull] Four commenters requested minor revisions, which included
creating a response code to tell the provider that
[[Page 8394]]
additional medical information is needed, correcting a typographical
error for repeating a data element, adding a qualifier to enable the
provider to link a request with an attachment, and defining two
segments that only support paper attachments. These requests have been
reflected in the revised Addenda.
[sbull] Fourteen of the commenters asked for additional
clarification on the appropriate use of the standard for referral
certification and authorization as a two-way transaction. The
Implementation Guide is modified to illustrate the model use of this
transaction to include a follow-up EDI or non-EDI response.
[sbull] One commenter asked a question relating to whether a
transaction should be rejected if there is no patient event tracking
number (TRN) segment for the patient, when the patient is not the
subscriber. ASC X12N clarified in the Addenda that the transaction
should not be rejected. The TRN usage instruction was made specific
about when the data are required.
[sbull] One of the commenters requested that a new code be
developed to replace the Assigned By Receiver (ABR) code rather than
use an existing code to define an element for which it was not
intended. A data maintenance request has been approved to have a code
added, but it will not be in effect for the ASC X12N 4010 Version of
the Implementation Guide.
J. Transaction Standard for Health Care Claim Status
We proposed the adoption of the Addenda to Health Care Claim Status
Request and Response, ASC X12N 276/277, Version 4010, October 2002,
Washington Publishing Company, 004010X093A1 as the standard for the
health care claim status transaction.
We did not receive significant comments on this proposal.
K. Transaction Standard for Enrollment and Disenrollment in a Health
Plan
We proposed the adoption of the Addenda to Benefit Enrollment and
Maintenance, ASC X12N 834 Benefit Enrollment and Maintenance, Version
4010, October 2002, Washington Publishing Company, 004010X095A1 as the
standard for enrollment and disenrollment in a health plan transaction.
We did not receive significant comments on this proposal.
L. Transaction Standard for Health Care Claim Payment/Advice
We proposed the adoption of the Addenda to Health Care Claim
Payment/Advice, ASC X12N 835, Version 4010, October 2002, Washington
Publishing Company, 004010X091A1 as the standard for dental,
professional, institutional, and pharmacy health care payment and
remittance advice transactions.
We did not receive significant comments on this proposal.
M. Transaction Standard for Health Care Premium Payments
Comment: A number of commenters pointed out that adoption of the
ASC X12N 004010X061 and ASC X12N 004010X061A1 standards were not
included in CMS-0005-P.
Response: We received comments pointing out that the transaction
standard for Health Care Premium Payments, the ASC X12N 820, 004010X061
and Addenda, 004010X061A1, were omitted from CMS-0005-P. We did not
specifically intend to exclude this transaction standard and its
Addenda from the proposed rule. The modification for the Addenda to
this Implementation Guide provides the same guidance as the Addenda for
the other transaction standards; the modification provides guidance to
the industry, in section A.1.3.1.2, in handling decimal points in
monetary transactions. Nevertheless, we recognize that these
Implementation Guide modifications were not expressly identified and
separately listed in CMS-0005-P, and thus we are including them as
follows in section IV below.
IV. Waiver of Proposed Rulemaking
We ordinarily publish a notice of proposed rulemaking in the
Federal Register and invite public comment on the proposed rule. The
notice of proposed rulemaking includes a reference to the legal
authority under which the rule is proposed, and the terms and substance
of the proposed rule or a description of the subjects and issues
involved. This procedure can be waived, however, if an agency finds
good cause that a notice and public comment procedure is impracticable,
unnecessary, or contrary to the public interest and incorporates a
statement of the finding and its reasons in the rule issued.
We find for good cause that it is unnecessary to undertake notice
and comment rulemaking procedures for this final rule because the
Addenda modifications for Sec. 162.1702 ``Standard for health care
premium payments,'' Sec. 162.1802 ``Standards for coordination of
benefits,'' and technical modifications approved by the DSMOs (relating
to Initial Treatment Date, Spinal Manipulation Certifications for
Medicare Part B, and the Test Date for Dialysis Patients) offer no
substantive changes to the standard and Addenda and merely provide
explanatory guidance.
The Addenda for the Health Plan Premium Payments Transaction
provides the same guidance to the industry as the Addenda for other
adopted transactions that were proposed in the proposed rule at 67 FR
38050.
The Coordination of Benefits Transaction Standard is a variation of
the health care claim transaction for institutional, dental, and
professional providers that was proposed in CMS-0005-P.
The three modifications approved by the DSMOs but not included in
the Addenda specifications are merely technical corrections relating to
Initial Treatment Date, Spinal Manipulation Certifications for Medicare
Part B, and the Test Date for Dialysis Patients for a single
transaction standard. These corrections in essence correct a
typographical error in the draft Addenda and do not require any data
elements to be changed.
We received comments on the standard for the health care claim, and
have responded to those in this final rule. Because each of the
transaction standards adopted by the Transactions final rule has
Addenda that were approved for use by the industry, we are adopting the
Addenda for each of the proposed transactions so that implementation of
the Addenda for each of the adopted standards will be consistent.
Therefore, for good cause, we waive notice and public comment
procedures under 5 U.S.C. 553(b)(B).
V. Collection of Information Requirements
Under the Paperwork Reduction Act (PRA) of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the PRA of 1995 requires that
we solicit comment on the following issues:
[sbull] The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
[sbull] The accuracy of our estimate of the information collection
burden.
[sbull] The quality, utility, and clarity of the information to be
collected.
[sbull] Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
[[Page 8395]]
Therefore, we are soliciting public comments on each of these
issues for the information collection requirements discussed below.
The information collection requirements and associated burdens in
Sec. Sec. 162.1002, 162.1102, 162.1202, 162.1302, 162.1402, 162.1502,
162.1602, 162.1702, and 162.1802 are subject to the PRA. The burden of
these standards is addressed under OMB approval number 0938-0866.
We are submitting a copy of these revisions to the regulation
sections to OMB for its review of the information collection
requirements. We will also submit the all of the revisions for review
and reapproval under 0938-0866. These revisions are not effective until
OMB has approved them. If you comment on any of these information
collection and record keeping requirements, please mail copies directly
to the following:
Office of Strategic Operations and Regulatory Affairs, Centers for
Medicare and Medicaid Services, 7500 Security Boulevard, Attn: PRA
Reports Clearance Officer, Baltimore, MD 21244, Attn: Julie Brown, CMS-
0003-F/0005-F; and
Office of Information and Regulatory Affairs, Office of Management and
Budget, Room 10235, New Executive Office Building, Washington, DC
20503, Attn: Brenda Aguilar, Desk Officer, CMS-0003-F/0005-F.
VI. Regulatory Impact Statement
We have examined the impacts of this rule as required by Executive
Order 12866 (September 1993, Regulatory Planning and Review), the
Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-354),
section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
Executive Order 12866 (as amended by Executive Order 13258 which
merely reassigns responsibility of duties) directs agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). A
regulatory impact analysis (RIA) must be prepared for major rules. The
analysis in the Transactions Rule assumed that the adopted standards
will be able to be implemented successfully by the industry. The
changes adopted in this final rule are a result of industry analyses
that showed certain minor modifications to the adopted standards would
be necessary to permit full industry compliance with the standards.
These modifications make limited adjustments and corrections to the
overall standards and would facilitate the congressional intent of
implementation of national electronic standards. Thus, the impact
analysis previously published, 65 FR 50350 through 50365, would reflect
industry experience in implementing the changes adopted in this rule.
In relation to the prior impact analysis, this final rule imposes
no additional burdens and creates no additional costs. All of the
modifications adopted in this final rule and proposed in CMS-0003-P (67
FR 38044) and CMS-0005-P (67 FR 38050) are required to facilitate
successful implementation of the standards. Their implementation will,
in fact, avoid costs that were not anticipated in the impact analysis
of the Transactions Rule.
The 115 approved modifications to the standards included 48
maintenance changes (minor error corrections or clarifications), and 67
modifications to the standards. Details of these 67 modifications
include--
[sbull] Changing the usage of data elements from ``required'' to
``situational'' (about 20 percent of changes);
[sbull] Removal of certain data elements (about 20 percent of
changes);
[sbull] Allowing certain data elements to be reported via external
code sets rather than data elements in the transaction (about 20
percent of changes); and
[sbull] Adding additional functionality to some transactions (about
40 percent of changes).
In particular, institutional and professional providers that have
submitted ASCA compliance plans will not be required to retool systems
and restructure current operations to accommodate the adopted NDC for
reporting drugs and biologics on non-retail pharmacy standard
transactions. Estimates reported to the NCVHS indicated that the cost
of transitioning to NDCs on institutional claims could easily exceed an
institution's cost for adopting all other transaction standards
combined. While costs could vary depending on the size of the facility,
hospitals estimate the minimum cost at $200,000 per facility to switch
from HCPCS codes to NDCs. The industry also estimates that typical
physician practices may spend $800 to as much as $100,000 for practice
management systems.\2\ Although included for purposes of illustration,
documentation to substantiate these estimates of the true costs for
institutional providers of adopting the NDC as the code set standard
for transactions involving drugs and biologics was not provided.
Consequently, we do not consider these to be reliable estimates of the
true costs for institutional providers of adopting the NDC as the code
set standard for transactions involving drugs and biologics. This final
rule retracts the adoption of the NDC and does not adopt any standard
medical code set for reporting drugs and biologics on nonretail
pharmacy transactions. Institutional and professional providers can
continue their current practices for reporting drugs and biologics on
institutional and professional standard transactions.
---------------------------------------------------------------------------
\2\ Testimony from health care providers to the NCVHS on
February 1, 2001.
---------------------------------------------------------------------------
The RFA requires agencies to determine whether a rule will have a
significant economic impact on a substantial number of small entities.
On November 17, 2000, the Small Business Administration (SBA) published
a final rule (65 FR 69432) changing the small business size standards
for the health care industry. This SBA rule became effective December
18, 2000. The size standards that the SBA now uses are those defined by
the North American Industry Classification System. Before that, the SBA
used size standards as defined by the Standard Industrial Codes. The
size standard is no longer a uniform $5 million in annual revenues for
all components in the health care sector. Rather, the size standard now
ranges from $6 million to $29 million. The RFA for this final rule is
linked to the aggregate RFA for all the Administrative Simplification
standards that appeared in the Transactions Rule, which predated the
SBA change. It is appropriate, for purposes of this final rule, to
continue to use the $5 million small business size standard that was in
effect at the time of publication of the Transactions Rule. Maintaining
this consistent definition for small business size minimizes confusion
in the industry and does not adversely impact entities that were not
considered small businesses according to the Transaction Rule
definition. Nonprofit organizations are considered small entities.
Small government jurisdictions with a population of less than 50,000
are considered small entities. Individuals and States are not
considered small entities. Most hospitals and most other providers and
suppliers are small entities, either by nonprofit status or by having
revenues of $5 million or less in any one year. For purposes of the
RFA, all retail pharmacies are considered to be small entities. We have
determined that this final rule will not have a significant economic
impact on a substantial number of small entities.
[[Page 8396]]
This final rule makes only minor modifications to the regulatory
process already put in place by the Transactions Rule (65 FR 50350
through 50365), which will generally reduce compliance burden on
covered entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area and has fewer than 100 beds. We have determined that
this final rule will not have an additional significant impact on a
substantial number of small rural hospitals. This final rule makes only
minor modifications to the regulatory process already put in place by
the Transactions Rule (65 FR 50350 through 50365), which will generally
reduce compliance burden, particularly on hospitals and other
institutional providers, who will no longer be required to adopt the
NDC for transactions involving drugs and biologics.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule that may result in an expenditure in any one year by
State, local, or tribal governments, in the aggregate, or by the
private sector, of $110 million. This final rule will have no mandated
consequential effect on State, local, or tribal governments, or on the
private sector when using the Regulatory Impact Analysis for the
Transactions Rule (65 FR 50350 through 50365) as a baseline.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. We have determined that this final rule will not
significantly affect the rights, roles, and responsibilities of States.
This final rule makes only minor modifications to the regulatory
process already put in place by the Transactions Rule (65 FR 50350
through 50365), which will generally reduce compliance burden on
covered entities.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget (OMB).
List of Subjects in 45 CFR Part 162
Administrative practice and procedure, Electronic transactions,
Health facilities, Health insurance, Hospitals, Incorporation by
reference, Medicare, Medicaid, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble of this final rule, the
Department of Health and Human Services amends 45 CFR subtitle A,
subchapter C, part 162 as follows:
PART 16--ADMINISTRATIVE REQUIREMENTS
1. The authority citation for part 162 continues to read as
follows:
Authority: Secs. 1171 through 1179 of the Social Security Act
(42 U.S.C.1320d-1320d-8), as added by sec. 262 of Pub. L. 104-191,
110 Stat. 2021-2031, and sec. 264 of Pub. L. 104-191, 110 Stat.
2033-2034 (42 U.S.C. 1320d-2 (note)).
2. Section 162.900 is revised to read as follows:
Sec. 162.900 Compliance dates for transaction standards and code
sets.
(a) Small health plans. All small health plans must comply with
applicable requirements of subparts I through R of this part no later
than October 16, 2003.
(b) Covered entities that timely submitted a compliance plan. Any
covered entity, other than a small health plan, that timely submitted a
compliance plan with the Secretary under the provisions of section 2 of
Pub. L. 107-105, 115 Stat. 1003 (ASCA) must comply with the applicable
requirements of subparts I through R of this part no later than October
16, 2003.
(c) Covered entities that did not timely submit a compliance plan.
Any covered entity, other than a small health plan, that did not
timely submit a compliance plan under the provisions of section 2 of
Pub. L. 107-105, 115 Stat. 1003 (ASCA) must comply with the applicable
requirements of subparts I through R of this part--
(1) Beginning on October 16, 2002, and ending on October 15, 2003--
(i) For the corresponding time period; or
(ii) For the time period beginning on October 16, 2003.
(2) Beginning on and after October 16, 2003, for the corresponding
time period.
3. Section 162.920 is revised to read as follows:
Sec. 162.920 Availability of implementation specifications.
A person or an organization may directly request copies of the
implementation standards described in subparts I through R of this part
from the publishers listed in this section. The Director of the Office
of the Federal Register approves the implementation specifications
described in this section for incorporation by reference in subparts I
through R of this part in accordance with 5 U.S.C. 552(a) and 1 CFR
part 51. The implementation specifications described in this paragraph
are also available for inspection by the public at the Office of the
Federal Register, 800 North Capitol Street, NW., Suite 700, Washington,
DC; and the Centers for Medicare & Medicaid Services, 7500 Security
Boulevard, Baltimore, Maryland 21244. Copy requests must be accompanied
by the name of the standard, number, if applicable, and version number.
Implementation specifications are available for the following
transactions:
(a) ASC X12N specifications. The implementation specifications for
ASC X12N standards may be obtained from the Washington Publishing
Company, PMB 161, 5284 Randolph Road, Rockville, MD, 20852-2116;
Telephone (301) 949-9740; and FAX: (301) 949-9742. They are also
available through the Washington Publishing Company on the Internet at
http://www.wpc-edi. com/. The transaction implementation specifications
are as follows:
(1) The ASC X12N 837--Health Care Claim: Dental, Version 4010, May
2000, Washington Publishing Company, 004010X097 and Addenda to Health
Care Claim: Dental, Version 4010, October 2002, Washington Publishing
Company, 004010X097A1, as referenced in Sec. 162.1102 and Sec.
162.1802.
(2) The ASC X12N 837--Health Care Claim: Professional, Volumes 1
and 2, Version 4010, May 2000, Washington Publishing Company,
004010X098 and Addenda to Health Care Claim: Professional, Volumes 1
and 2, Version 4010, October 2002, Washington Publishing Company,
004010X098A1, as referenced in Sec. 162.1102 and Sec. 162.1802.
(3) The ASC X12N 837--Health Care Claim: Institutional, Volumes 1
and 2, Version 4010, May 2000, Washington Publishing Company,
004010X096 and Addenda to Health Care Claim: Institutional, Volumes 1
and 2, Version 4010, October 2002, Washington Publishing Company,
004010X096A1 as referenced in Sec. 162.1102 and Sec. 162.1802.
(4) The ASC X12N 835--Health Care Claim Payment/Advice, Version
4010, May 2000, Washington Publishing Company, 004010X091, and Addenda
to Health Care Claim Payment/Advice, Version 4010, October 2002,
Washington Publishing Company,
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004010X091A1 as referenced in Sec. 162.1602.
(5) ASC X12N 834--Benefit Enrollment and Maintenance, Version 4010,
May 2000, Washington Publishing Company, 004010X095 and Addenda to
Benefit Enrollment and Maintenance, Version 4010, October 2002,
Washington Publishing Company, 004010X095A1, as referenced in Sec.
162.1502.
(6) The ASC X12N 820--Payroll Deducted and Other Group Premium
Payment for Insurance Products, Version 4010, May 2000, Washington
Publishing Company, 004010X061, and Addenda to Payroll Deducted and
Other Group Premium Payment for Insurance Products, Version 4010,
October 2002, Washington Publishing Company, 004010X061A1, as
referenced in Sec. 162.1702.
(7) The ASC X12N 278--Health Care Services Review--Request for
Review and Response, Version 4010, May 2000, Washington Publishing
Company, 004010X094 and Addenda to Health Care Services Review--Request
for Review and Response, Version 4010, October 2002, Washington
Publishing Company, 004010X094A1, as referenced in Sec. 162.1302.
(8) The ASC X12N-276/277 Health Care Claim Status Request and
Response, Version 4010, May 2000, Washington Publishing Company,
004010X093 and Addenda to Health Care Claim Status Request and
Response, Version 4010, October 2002, Washington Publishing Company,
004010X093A1, as referenced in Sec. 162.1402.
(9) The ASC X12N 270/271--Health Care Eligibility Benefit Inquiry
and Response, Version 4010, May 2000, Washington Publishing Company,
004010X092 and Addenda to Health Care Eligibility Benefit Inquiry and
Response, Version 4010, October 2002, Washington Publishing Company,
004010X092A1, as referenced in Sec. 162.1202.
(b) Retail pharmacy specifications. The implementation
specifications for retail pharmacy standards may be obtained for a fee
from the National Council for Prescription Drug Programs (NCPDP), 9240
E. Raintree Drive, Scottsdale, AZ 85260; Telephone (480) 477-1000; and
FAX (480) 767-1042. They may also be obtained through the Internet at
http://www.ncpdp.org. The transaction implementation specifications are
as follows:
(1) The Telecommunication Standard Implementation Guide Version 5,
Release 1 (Version 5.1), September 1999, National Council for
Prescription Drug Programs, as referenced in Sec. 162.1102, Sec.
162.1202, Sec. 162.1302, Sec. 162.1602, and Sec. 162.1802.
(2) The Batch Standard Batch Implementation Guide, Version 1,
Release 1 (Version 1.1), January 2000, supporting Telecommunication
Standard Implementation Guide, Version 5, Release 1 (Version 5.1) for
the NCPDP Data Record in the Detail Data Record, National Council for
Prescription Drug Programs, as referenced in Sec. 162.1102, Sec.
162.1202, Sec. 162.1302, and Sec. 162.1802.
(3) The National Council for Prescription Drug Programs (NCPDP)
equivalent NCPDP Batch Standard Batch Implementation Guide, Version 1,
Release 0, February 1, 1996, as referenced in Sec. 162.1102, Sec.
162.1202, Sec. 162.1602, and Sec. 162.1802.
4. Section 162.1002 is amended by--
A. Revising the introductory text to the section.
B. Redesignating paragraphs (a) through (f) as paragraphs (a)(1)
through (a)(6).
C. In redesignated paragraph (a)(1), further redesignating
paragraphs (1) through (5) as paragraphs (a)(1)(i) through (a)(1)(v).
D. In redesignated paragraph (a)(2), further redesignating
paragraphs (1) through (4) as paragraphs (a)(2)(i) through (a)(2)(iv).
E. In redesignated paragraph (a)(3), further redesignating
paragraphs (1) and (2) as paragraphs (a)(3)(i) and (a)(3)(ii).
F. In redesignated paragraph (a)(5), further redesignating
paragraphs (1) through (7) as paragraphs (a)(5)(i) through (a)(5)(vii).
G. In redesignated paragraph (a)(6), further redesignating
paragraphs (1) through (3) as paragraphs (a)(6)(i) through (a)(6)(iii).
H. Adding new paragraph (a) introductory text and paragraph (b).
The republication and additions read as follows:
Sec. 162.1002 Medical data code sets.
The Secretary adopts the following maintaining organization's code
sets as the standard medical data code sets:
(a) For the period from October 16, 2002 through October 15, 2003:
* * * * *
(b) For the period on and after October 16, 2003:
(1) The code sets specified in paragraphs (a)(1), (a)(2),(a)(4),
and (a)(5) of this section.
(2) National Drug Codes (NDC), as maintained and distributed by
HHS, for reporting the following by retail pharmacies:
(i) Drugs.
(ii) Biologics.
(3) The Healthcare Common Procedure Coding System (HCPCS), as
maintained and distributed by HHS, for all other substances, equipment,
supplies, or other items used in health care services, with the
exception of drugs and biologics. These items include, but are not
limited to, the following:
(i) Medical supplies.
(ii) Orthotic and prosthetic devices.
(iii) Durable medical equipment.
5. Section 162.1102 is revised to read as follows:
Sec. 162.1102 Standards for health care claims or equivalent
encounter information transaction.
The Secretary adopts the following standards for the health care
claims or equivalent encounter information transaction:
(a) For the period from October 16, 2002 through October 15, 2003:
(1) Retail pharmacy drug claims. The National Council for
Prescription Drug Programs (NCPDP) Telecommunication Standard
Implementation Guide, Version 5, Release 1, September 1999, and
equivalent NCPDP Batch Standard Batch Implementation Guide, Version 1,
Release 0 February 1, 1996. (Incorporated by reference in Sec.
162.920).
(2) Dental health care claims. The ASC X12N 837--Health Care Claim:
Dental, Version 4010, May 2000, Washington Publishing Company,
004010X097. (Incorporated by reference in Sec. 162.920).
(3) Professional health care claims. The ASC X12N 837--Health Care
Claim: Professional, Volumes 1 and 2, Version 4010, May 2000,
Washington Publishing Company, 004010X098. (Incorporated by reference
in Sec. 162.920).
(4) Institutional health care claims. The ASC X12N 837--Health Care
Claim: Institutional, Volumes 1 and 2, Version 4010, May 2000,
Washington Publishing Company, 004010X096. (Incorporated by reference
in Sec. 162.920).
(b) For the period from October 16, 2002 through October 15, 2003:
(1) Retail pharmacy drugs claims. The National Council for
Prescription Drug Programs (NCPDP) Telecommunication Standards
Implementaiton Guide, Version 5, Release 1, September 1999, and
equivalent NCPDP Batch Standards Batch Implementation Guide, Version 1,
Release 1, (Version 1.1), January 2000, supporting Telecomunication
Version 5.1 for the NCPDP Data Record in the Detail Data Record.
(Incorporated by reference in Sec. 162.920).
(2) Dental, health care claims. The ASC X12N 837--Health Care
Claim: Dental, Version 4010, May 2000, Washington Publishing Company,
004010X097. and Addenda to Health Care Claim: Dental, Version 4010,
[[Page 8398]]
October 2002, Washington Publishing Company, 004010X097A1.
(Incorporated by reference in Sec. 162.920).
(3) Professional healt care claims. The ASC X12N 837--Health Care
Claims: Professional, Volumes 1 and 2, Version 4010, may 2000,
Washington Publishing Company, 004010X098 and Addenda to Health Care
Claims: Professional, Volumes 1 and 2, Version 4010, October 2002,
Washington Publishing Company, 004010x098A1. (Incorporated by reference
in Sec. 162.920).
(4) Institutional health care claims. The ASC X12N 837--Health Care
Claim: Institutional, Volumes 1 and 2, Version 4010, May 2000,
Washington Publishing Company, 004010X096. (Incorporated by reference
in Sec. 162.920).
6. Section 162.1202 is revised to read as follows:
Sec. 162.1202 Standards for eligibility for a health plan
transaction.
The Secretary adopts the following standards for the eligibility
for a health plan transaction:
(a) For the period from October 16, 2002 through October 15, 2003:
(1) Retail pharmacy drugs. The National Council for Prescription
Drug Programs Telecommunications Standards Implementaiton Guide,
Version 5, Release 1, September 1999, and equivalent NCPDP Batch
Standards Batch Implementation Guide, Version 1, Release 0, February 1,
1996. (Incorporated by reference in Sec. 162.920).
(2) Dental, professional, and institutional health care eligibility
benefit inquiry and response. The ASC X12N 270/271--Health Care
Eligibility Benefit Inquiry and Response, Version 4010, May 2000,
Washington Publishing Company,004010X092. (Incorporated by reference in
Sec. 162.920).
(b) For the period on and after October 16, 2003:
(1) Retail pharmacy drug claims. The National Council for
Prescription Drug Programs (NCPDP) Telecommunication Standard
Implementation Guide, Version 5, Release 1, September 1999, and
equivalent NCPDP Batch Stand