Federal Operating Rules for Healthcare Administrative Simplification

Federal Operating Rules for Healthcare Administrative Simplification Gwendolyn Lohse, Deputy Director CAQH Ann Brisk, VP Health Care Transaction Services, OptumHealth Financial Priscilla Holland, Senior Director NACHA, The Electronic Payments Association 2011 NACHA The Electronic Payments Association. All rights reserved. No part of this material may be used without the prior written permission of NACHA. This material is not intended to provide any warranties, legal advice, or professional assistance of any kind.

Discussion Items Administrative Simplification and Healthcare Reform Healthcare Operating Rules: CAQH CORE Overview Real-world Perspective OptumHealth NACHA and Healthcare Moving Forward 2

Federal Imperatives Impacting Healthcare Administrative Simplification: Highlights The Federal imperatives for healthcare administrative simplification are numerous HIPAA v5010: Jan. 2012 Deadline for health plan and provider systems ICD-10: Oct. 1, 2013 Deadline for health plan and provider systems The American Recovery and Reinvestment Act (ARRA) Health Information Technology (HITECH) Act: Through 2015 Stakeholders will be determining how to coordinate with national and regional efforts Nationwide Health Information Network (NHIN) State-based decisions on the role of administrative data in HIEs and Medicaid More than half a billion dollars given to HIEs; HIEs require Connectivity; CORE Connectivity is well aligned with Federal efforts (e.g., NHIN ) Providers financial incentives for Meaningful Use of HIT via Certified EMRs Three stages: Stage 1 released and initially included the administrative rules; administrative transactions may be included in a future stage The Patient Protection and Affordable Care Act (ACA): Through 2017 Stakeholders are required to meet a range of deadlines, e.g., Medical loss ratios (MLRs) small group health plans must limit administrative costs to 20 percent and large groups to 15 percent Operating rules for administrative transactions 3

ACA Impact on Administrative Simplification: Section 1104 Section 1104 of the ACA (H.R.3590) requires HHS to appoint a qualified non-profit entity to develop of a set of operating rules for the conduct of electronic administrative healthcare transactions Section 1104 Highlights Administrative and financial standards and operating rules must: Enable the determination of eligibility and financial responsibility for specific services prior to or at the point of care Be comprehensive, requiring minimal augmentation Provide for timely acknowledgment, response, and status reporting Describe all data elements in unambiguous terms, require that such data elements be required or conditioned upon set values in other fields, and prohibit additional conditions Health plans must file a statement with HHS confirming compliance; financial penalties for health plans are significant 4

ACA Section 1104: Mandated Operating Rule Approach Operating rule writing and mandated implementation timeframe Rule adoption deadlines July 2011 Eligibility and Claim Status 1 July 2012 Claims remittance/ payment and electronic funds transfer (plus health plan ID) 2013 July 2014 Enrollment, Referral authorization, attachments, etc 2015 2016 Effective Dates 2 Jan. 2013 Jan. 2014 Jan. 2016 Notes: (1) Red italicized font indicates that CORE Phases I III has placed a focus on these areas. Scope/definition of the Federal regulation is TBD but NCVHS has recommended CORE Phase I and II rules with enhancements (2) Documentation of compliance will be identified by Federal regulation. Health plans must demonstrate that they conducts the electronic transactions in a manner that fully complies with the regulations by providing documentation showing that the plan has completed end-to-end testing for such transactions. HHS may designate independent entities to do certification. 5

Section 1104: Current Milestones Electronic Funds Transfer (EFT) and Electronic Remittance Advice (ERA) Dec. 3, 2010: NCVHS Subcommittee on Standards held Hearings on EFT and ERA; Authoring entity applications due Jan 31, 2011 Feb. 9 & 10, 2011: NCVHS Full Committee Meeting to discuss applications; March 18 follow-up call 2011: CMS will move forward informed by NCVHS recommendation July 2012: EFT and ERA Rule Adoption Deadline Status In December 2010, three organizations proposed to be authors for the ACA EFT and ERA operating rules: Healthcare (non-retail pharmacy): CAQH CORE (in partnership with NACHA) X12 Healthcare (retail pharmacy): NCPDP In December 2010, ten organizations provided testimony regarding next steps for EFT and ERA operating rules: Majority of the testifiers expressed similar recommendation CAQH CORE and NACHA proposed that healthcare and financial industry operating rules would be complementary Feb. 17, 2011: NCVHS recommended NACHA as healthcare EFT SDO and its CCD+ format March 23, 2010 NCVHS recommended CAQH CORE be the healthcare authoring entity in collaboration with NACHA Fully vetted rules to be submitted to NCVHS by August 1, 2011 CAQH CORE to establish mechanisms for greater direct engagement of SDOs, and broader provider participation Clarify the scope, focus, and limitations between operating rules and standards 6

CAQH Initiatives Industry-wide stakeholder collaboration to facilitate the development and adoption of industry-wide operating rules for administrative transactions. More than 120 participating organizations, covering all segments of the industry; includes SDOs, government, health plans, providers, vendors, etc. Health plans represent approximately 75 percent of the commercially insured. Service that replaces multiple health plan paper processes for collecting provider data with a single, electronic, uniform data-collection system (i.e. credentialing). 7

CORE Phased Approach Design CORE Rule Development Phase I Rules ARRA HITECH and Health Reform Phase II Rules Phase III Rules Future Phases 2005 2006 2007 2008 2009 2010 2011 Market Adoption (CORE Certification) *Oct 05 HHS launches national IT efforts Phase I Certifications Phase II Certifications REMINDER: CORE rules are a baseline; entities are encouraged to go beyond. 8

What are Healthcare Operating Rules? As defined in the Patient Protection and Affordable Care Act (ACA), the term refers to the necessary business rules and guidelines for the electronic exchange of information that are not defined by a standard or its implementation specifications... Operating rules encourage an interoperable network and, thereby, can allow providers to use the system of their choosing (remaining vendor agnostic is a key CORE principle) Prior to CORE, operating rules did not exist in healthcare outside of individual trading relationships; current healthcare operating rules build upon a range of standards, healthcare specific and industry neutral Rights and responsibilities of all parties Security Operating Rules: Key Components Response timing standards Liabilities Exception processing Transmission standards and formats Error resolution 9

The CORE Integrated Model for Operating Rules Mission: To build consensus among all essential healthcare stakeholders on a set of operating rules that facilitate administrative interoperability starting with eligibility, and then moving sequentially to the other transactions in the claims process Vision: Provider access to administrative information before or at the time of service, using the electronic system of their choice, for any patient or health plan Main components: A rule development and writing process, including an open, transparent approval/voting approach that aligns with other industry initiatives Education and outreach A certification and endorsement process (testing occurs via independent entities and is transaction-based, e.g. 55% of commercially insured already impacted by CORE certification) Results: Tangible outcomes in a compressed timeframe 10

CORE 2011 Rule Writing Focus: EFT and ERA Potential EFT Operating Rules* Specific conditions on debiting of provider accounts Availability of funds Identification of health plan Enrollment and provision of banking information for EFT Potential ERA Operating Rules* Correct use of adjustments Standardized enrollment form Potential Joint EFT/ERA Operating Rules* Timing of EFT and ERA Proper use of the ERA trace number Define and address the specific situations for which health plans would be permitted to debit provider accounts based on NACHA requirements, and establish additional requirements for such debiting regarding notification and dispute resolution Address how funds are made available to the provider on the settlement day of the transaction, understanding that plans coordinate with various third-party EFT processors Include a provision that health plans and their EFT processing agents agree to support the NACHA Rules for correctly identifying transactions with the name or number of the health plan Address providers interest in a single approach to enrollment for EFT. Such a rule could require health plans to obtain the EFT information for providers through a designated utility/utilities Require the correct use of adjustments in the ASC X12 835 v5010, including required documentation of the dates of service for each adjustment Standardizing the content of the enrollment form for ERA, and addressing industry business rules that support simplification of the enrollment process Address amount of lapsed time between provider receipt of an EFT and ERA Require all health plans to provide the ERA trace number in the standard format consistently so that banks receive the information they need to properly populate the addenda record so it goes through the ACH Network with the payment * Note: These rule items represent a selection of potential topics CORE participants may consider during the EFT and ERA rule writing process and are not final rules. Items were identified in joint NACHA-CAQH research. 11

NACHA and CAQH CORE Collaboration Since its inception in 2005, CAQH CORE has collaborated with NACHA Share lessons learned from financial industry in development of healthcare operating rules that support interoperability NACHA serves on CORE Subgroups and Work Groups NACHA membership and CORE participants represent critical market mass and can help lead change EFT and ERA operating rules represent the convergence of banking and healthcare CORE and NACHA: Rule writing partnership will expand Mandated operating rules on ERA and EFT have prompted additional activities for the partnership, e.g., collaborated on interviews with leading stakeholders to gauge current market views on where the industry can have the most impact given the ACA deadlines NACHA, FIs and CAQH: Non-rule writing efforts EFT enrollment solution analysis Joint outreach, education and ROI tracking 12

CAQH CORE Next Steps: 2011 Transition CORE governance given move to mandatory environment Section 1104 is an unfunded mandate; CORE Transition Committee is developing a three to business and governance plan while CAQH continues to fund CORE Increasing state and provider input is a critical goal; methods for SDO-operating rule author collaboration as well Create open, well-vetted CORE operating rules that build on standards and speak to real-world business needs Rule scope should provide feasible road-map focused on value and interdependencies, e.g., coverage exchanges will need to display data EFT (CCD+ format) and ERA rule writing between now to August deadline; eligibility and claim status enhancements being finalized Highlighting iterative process with standards and support of standards Continue to offer certification with independent testing organizations Maintain ongoing tracking of ROI and issue public reports IBM retained to track Phase II impact; providers considering regional case studies Increase education, outreach and demonstration, e.g., healthcare must learn more about financial service industry use of EFT 13

HIPAA Claims-Related Transactions Provider Registration Utilization Review Billing and Collections Treasury Can be sent via paper, through clearinghouse or direct Eligibility Inquiry (270) Eligibility Response (271) Certification Request (278) Certification Response (278) Claim/Encounter (837) Status Inquiry (276) Status Response (277) Payment/Remittance (835) (EFT CTX, CCD+) Bank Bank Payer Verification Function Utilization Review Claims Processing Treasury 14

Real-world Perspective OptumHealth Ann Brisk, VP Health Care Transaction Services, OptumHealth Financial 15

Who is OptumHealth Financial OptumHealth Financial Services (OHFS) is a subsidiary of UnitedHealth Group that offers financial services to the health care industry including health accounts, stop loss insurance and payment products. OHFS offers the Electronic Payments and Statements solution which payers use to pay providers electronically. We process payments for over 20 payers paying over 600,000 providers more than $40B annually. OHFS acts a payment vendor to execute payments for payers and we own OptumHealth Bank which we use to conduct the ACH transactions. 16

Who Are the Stakeholders Exchanging EFT and ERA? *Already using NACHA rules; ** May use CORE rules The electronic functions conducted by the stakeholder types vary depending on business needs and trading partner relationships Financial Institutions* and Banks* Holds dollars and exchanges ACH payments May also serve as a vendor A range of technology solutions serving payers and/or providers*/** Healthcare clearinghouse to move electronic data Payment vendor (which may also be a bank) Print vendor to print check and remittance Practice Management System (front end solution for provider) Payers**/Health plans** Administer health insurance plans and process claims Providers** Any kind of health care industry practitioner that provides care 17

Payer Challenges Adoption of electronic transactions has been slow and inconsistent due to Inflexible Systems Multiple Electronic Formats Other Payer Priorities (5010, ICD 10, etc) Payers have published over 1,200 documents describing their interpretation and implementation of HIPAA standards Facilitated the creation of clearinghouses to help standardize the claims for payers Doesn t address the need to standard formats and/or develop more flexible systems 18

Solution Architecture Example Bank $ Bank Provider Bank Provider Electronic Payment Instructions Bank Bank Provider Provider PAYER Payer File Payment Vendor ERA Bank Bank Provider Provider Paper Payment Instructions and Data File Bank Bank Provider Provider Provider Print Vendor EOP and Check Provider 19

Attributes of a Solution Electronic Funds Transfer (EFT): Payer funds settlement account at bank Vendor creates NACHA compliant file and sends to funding bank Payments delivered securely to provider designated banks Electronic Remittance Advice (ERA): Consolidated and compliant 835 file (if applicable) that can be delivered electronically to a variety of destinations, including clearinghouses, payers, and web host for download Provider options to automatically upload 835 to PMS system, pick up from server, download to desktop or print advice information must meet all providers needs 20

Attributes of a Solution (continued) Payer 835 or Proprietary Output: Files able to be validated against HIPAA 835 standards and separated and flagged if non-compliant File able to contain data for both paper and electronic transactions, to be separated and processed for delivery by vendor (allows payer to avoid tracking EFT providers in house and maximizes electronic) Data Accessibility: Payment and remittance advice information posted online for payer and provider and delivered to their clearinghouse Online access to all transaction information for both electronic and paper transactions Data in usable format Ability attach original EOB s to aid provider in posting 21

Key Value Components Deposit reconciliation ANSI 835 and any attachments that includes reconciling claim to payment to remittance to meet provider system requirements Accelerated posting deposit and detail receivable information are available within 24 hours and arrive on the same day Data available for providers to review and search for up to 13 months Customized reporting using claim and remit data Electronic storage and retrieval of remit, claim or correspondence ELIMINATE PAPER ROI costs of service should be considerably less than manual labor costs and should reduce bank fees, customer service calls and lost checks/escheatment 22

Results Decrease revenue cycle days from elimination of mail time Increase total dollars collected no more lost/misapplied checks Maximize efficiencies and revenues through automation Reduce back office costs 23

Potential Cost Savings Potential Areas of Cost Savings If All Claims Were Conducted Electronically Claims Submission 34% Eligibility Verification 24% Claims Payment 17% Claims Remittance 16% Claims Status 7% None of the Above 2% 33% of respondents indicated that the area in which significant cost savings could be achieved if all claim transactions were conducted electronically would be in the area of claims payment and claims remittance. HIMSS Vantage Point (February 2009) 24

What To Do Next? Set realistic ROI expectations Create a long-term strategy Leverage existing marketplace technology capabilities Evaluate existing capabilities and technology platforms Plan to be certified for ERA/EFT by January 2014 And always remember provider adoption is key 25

NACHA and Healthcare Moving Forward Priscilla Holland, Senior Director NACHA, The Electronic Payments Association 26

NACHA s Focus Wholesale payments B2B: Plans and Providers (Originators and Receivers) Information-intensive All financial institutions have potential to be impacted Plans: Government payments (Medicare and Medicaid), Insurance companies Providers: Doctors, Physicians Groups, Hospitals, Clinics Whether electronic or paper-based (lockbox), financial institutions need to understand and abide by privacy and security regulations 27

NACHA s Multi-faceted Work Rules and Standards: NACHA Rules Work Group formed Security of PHI through the ACH Network Format and size of transaction Flexibility of utilizing CCD+ or CTX (consistency of information and aiding EFT plus ERA) Providers informing all payers of bank account information Education: NACHA Website Healthcare Payments Resource updated Healthcare track at PAYMENTS 2011 and healthcare keynote speaker Partnership with American Medical Association and CAQH to provide ACH 101 education to physicians offices Advocacy: Healthcare Task Force created CAQH and NACHA joint outreach via interviews to assess current state of and any issues/desires with EFT and ERA Work commenced with CAQH and TCH around EFT Enrollment NACHA presence at health industry conferences 28

NCVHS Recommends CCD+ Official letter from NCVHS to the HHS secretary dated February 17, 2011: Discrete recommendations: Defined EFT transaction as the electronic message used by health plans to order, instruct or authorize a DFI to electronically transfer funds through the ACH Network from one account to another. Define the HC EFT standard as the format and content required for health plans to perform an EFT transaction Adopt CCD+ (in conformance with the NACHA Operating Rules) as the standard format for the HC EFT standard Identify NACHA as the standards development organization for maintenance of the HC EFT standard Adopt X12 835 TR3 REPORT as the implementation specification to define the content requirements for the CCD+ Consider the implications of the HC EFT standard relative to some banks becoming de factor healthcare clearinghouses as defined by HIPAA 29

2011 NACHA The Electronic Payments Association. All rights reserved. No part of this material may be used without the prior written permission of NACHA. This material is not intended to provide any warranties, legal advice, or professional assistance of any kind. http://healthcare.nacha.org/ 30

Healthcare at PAYMENTS 2011 Dr. Bonar PAYMENTS keynote Release of Health epayments News New healthcare track 31

Education Outreach NACHA and CAQH Partnering with AMA ACH Primer for Healthcare Build tools for providers to help them understand EFT payments EFT webinar in April Electronic newsletter Working with Regional Payments Associations to deliver healthcare training Healthcare Payments Resource Page 32