HIPAA Regulatory Alert: WEDI seeks transaction and code set guidance

Concerns over the compliance of trading partners

The Workgroup for Electronic Data Interchange (WEDI) has asked Health and Human Services Secretary Tommy Thompson to provide guidance in light of the fact that a substantial number of covered entities will not be able to achieve compliance with HIPAA Transaction and Code Set (TCS) standards by Oct. 16, 2003, as required under the Administrative Simplification Compliance Act.

In a letter to Thompson, WEDI reported that a number of covered entities that will be compliant are worried about trading partners or transactions that will not be compliant. The covered entities are considering contingency plans to avoid unintended consequences and adverse impacts, including rejection of nonstandard electronic transactions; disruption of payment flows to providers under Medicare, Medicaid, and private-sector health plans; and reversion to paper transactions by covered entities that are capable of generating transactions in a nonstandard format.

WEDI said that much progress has been made and there is considerable industry support for HIPAA TCS standards and their successful implementation. "The issue at hand," the group said, "is how does the industry make the short-term transition from its current state to a successful implementation, given a substantial degree of noncompliance in October 2003, and thus avoid the so-called train wreck that will result from reversion to paper claims or stoppage of cash payment flows."

Potential solutions offered

Two potential solutions the group asked Thompson to consider were 1) permitting compliant entities to use HIPAA TCS standard transactions that may not contain all required data content elements, if these transactions can otherwise be processed to completion by the receiving entity, until such time as compliance is achieved or penalties are assessed, and 2) permitting compliant covered entities to establish a brief transition period to continue using their current electronic transactions in lieu of reversion to paper transactions.

WEDI said its experts believe that reversion to paper has the highest potential for unintended consequences and adverse impacts for the health care industry. It indicated that its two recommended courses of action would not have an adverse impact on compliant covered entities.

"Further," WEDI says, "they eliminate the need for covered entities that are in the process of achieving but will not achieve HIPAA TCS standards compliance by the deadline from diverting scarce resources to reverting to paper as a temporary fix to avoid noncompliance. The choice to accept a nonstandard electronic transaction would be at the discretion of the covered entity. Nothing would compel a covered entity to forego its rights or obligations, nor would it preclude a compliant covered entity from filing complaints with the Centers for Medicare & Medicaid (CMS). In fact, WEDI contends that CMS’ complaint-based enforcement approach will be an incentive to hasten compliance with HIPAA TCS standards transactions, as will competition in the health care marketplace."

The group told Thompson that the health care industry believes that the goals underpinning a successful implementation of HIPAA TCS standards are to sustain cash flows from payers to providers, to minimize disruptions to business activities in the health care industry, and to allow sufficient time for covered entities that are making the effort to comply with HIPAA TCS standards transactions to make the transition to a successful implementation.

"For example," the letter says, "a large clearinghouse that is now compliant with the HIPAA TCS standards indicates that it has completed testing with only about 10% of more than 1,000 payers, and that it will not be able to complete testing by Oct. 16, because it is having difficulty with its payers scheduling testing because of the payers’ time constraints. Industry participants have indicated that a transition of approximately six months should be sufficient to achieve critical mass for a successful implementation."

For more information, visit www.wedi.org.