Healthcare Business News

Insurers object to new compliance fees; hospitals take opposing stance

By Virgil Dickson
Posted: April 10, 2014 - 12:30 pm ET

An HHS proposal designed to ensure uniformity in how healthcare providers and payers handle patient data has created a new division among the two groups. Insurance companies are objecting to the plan while hospitals and physicians are supporting it. The proposal would cost insurers between $25 million and $41 million, HHS estimates.

That split was reflected in the comments filed in reaction to the proposal, made public in January. The comment period ended April 3.

The proposal mandates insurance company compliance with a federal law that requires certain health plans to certify their compliance with the standards for claim status, electronic funds transfer and electronic remittance advice. The proof of compliance the plans need would establish that it has completed certain testing of its electronic transaction capabilities according to standards outlined in the Health Insurance Portability and Accountability Act.

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HHS released the rule to create uniformity in data exchange and reduce reliance on paper and manual processes to transmit data. The proposed policy was mandated by the Patient Protection and Affordable Care Act and applies only to “controlling health plans (CHP),” which are organizations that control their own business activities. The federal agency estimated the policy will impact 3,000 to 5,000 plans.

Failing to comply with the rule, once finalized, will result in penalty fees ranging from $20 to $40 for each beneficiary a company covers.

The rule as written may be too hard on plans, UnitedHealth Group argues. Safeguards should be put in place to protect companies that attempt to comply but are unsuccessful because of technical woes, UnitedHealth said in its comments.

“With the complexities inherent in software programming and in claims transactions, defective claims transactions can occur, despite a health plan's best efforts,” the payer said. “If a health plan acts in good faith to implement the appropriate standards and operating rules, identify and correct known gaps, and engage in one of the two validation pathways, it should not be subject to the strict certification penalties when an unforeseen defect occurs.”

As an alternative, plans should be given the opportunity to correct the error within a reasonable time frame after being notified by the CMS of the defect, UnitedHealth Group suggests.

The policy also could be potentially harmful to insurance companies as it designates CAQH, a not-for-profit alliance of health plans and trade associations, as the sole entity that can determine if a company is in compliance with the standards, the Blue Cross and Blue Shield Association said. This could lead to instances of conflict of interest as the organization may be tempted to give preferential treatment to members over non-members. The alliance's staff also may lack sufficient capacity to handle the volume of work in a timely manner, BCBS said.

Hospitals and physicians are supportive of the policy, but want to make sure that any penalties are the responsibility of the plans.

“We understand that there are some stakeholders who believe certification should be required of all entities that touch the processing of a claim, that they too become certified in the same way as CHPs, and that the same penalties be applied,” the American Hospital Association said.

The trade organization recommends against any such amendments to the final rule. Fines already exist for noncompliance for those who do not comply on a timely basis with HIPAA transaction standards, it argued. The American Academy of Family Physicians agreed.

Follow Virgil Dickson on Twitter: @MHvdickson

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