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New Law Provisions Cut Red Tape

April 10, 2012

Department of Health and Human Services (HHS) Secretary Kathleen Sebelius announced a proposed rule that would establish a unique health plan identifier under the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

The proposed rule would implement several Administrative Simplification provisions of the Affordable Care Act.

The proposed changes would save health care providers and health plans up to $4.6 billion over the next 10 years, according to estimates released by HHS. The estimates were included in a proposed rule that cuts red tape and simplifies administrative processes for doctors, hospitals and health insurance plans.

“The new health care law is cutting red tape, making our health care system more efficient and saving money,” Secretary Sebelius said. “These important simplifications will mean doctors can spend less time filling out forms and more time seeing patients.”

Currently, when health plans and entities like Third Party Administrators bill providers, they are identified using different identifiers that do not have a standard length or format.

As a result, providers run into a number of time-consuming problems, such as misrouting of transactions, rejection of transactions due to insurance identification errors, and difficulty determining patient eligibility.

The rule simplifies the administrative process for providers by proposing that health plans have a unique identifier of a standard length and format to facilitate routine use in computer systems. This will allow providers to automate and simplify their processes, particularly when processing bills and other transactions.

The proposed rule also delays required compliance by one year– from Oct. 1, 2013, to Oct. 1, 2014– for new codes used to classify diseases and health problems. These codes, known as the International Classification of Diseases, 10th Edition diagnosis and procedure codes, or ICD-10, will include new procedures and diagnoses and improve the quality of information available for quality improvement and payment purposes.

Many provider groups have expressed serious concerns about their ability to meet the Oct. 1, 2013, compliance date. The proposed change in the compliance date for ICD-10 would give providers and other covered entities more time to prepare and fully test their systems to ensure a smooth and coordinated transition to these new code sets.

The proposed rule is the third in a series of administrative simplification rules in the new health care law. HHS released the first in July of 2011 and the second in January of 2012, and plans to announce more in the coming months.

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