Health Care Reform Administrative Simplification Rules Could Lessen FPs' Administrative Burden

December 15, 2010 04:15 pm Sheri Porter

The burgeoning clerical burden that bogs down most physician offices every day across America could be alleviated by a section of the Patient Protection and Affordable Care Act(, leading one analyst to label the legislation as a "wish list" for physician offices.

A 2009 report released by the Healthcare Administrative Simplification Coalition, or HASC, found that about 25 percent of the nation's health care costs -- estimated at more than $2 trillion in 2007 -- go toward administrative functions, such as billing and payment tasks. Fortunately, Section 1104 of the Affordable Care Act focuses on reducing those costs by reorganizing and streamlining clerical procedures.

That prospect has Robert Tennant, a senior policy adviser for the Denver-based Medical Group Management Association, or MGMA, excited.

"When we (at MGMA) saw the (health care) bill, I can't tell you how pleased we were, because it really is a 'wish list' for provider offices," Tennant told AAFP News Now. MGMA has been fighting the administrative simplification battle for years, and, in 2005, it joined with the AAFP and the American Health Information Management Association to form HASC, which is committed to reducing the administrative costs and complexity of health care.

According to Tennant, the federal government's first attempt at taming administrative simplification came with the passage of the Health Insurance Portability and Accountability Act, or HIPAA, in 1996. Unfortunately, he said, some of the most physician-friendly provisions of that law -- such as the creation of a universal identification number for each health plan -- never got traction as even a proposed rule.

However, specific pieces of the new health care reform law should help streamline some very "ornery and inefficient" administrative procedures that slow down physician practices, said Tennant.

For example, the law could help physicians determine patient eligibility. According to Tennant, it is important that family physician practices have the ability to verify the validity of a patient's health insurance -- and discern the plan's copays and deductibles -- before a patient is ushered into the exam room.

Compliance with existing standards, which were created by the Council for Affordable Quality Health Care's Committee on Operating Rules for Information Exchange(, are voluntary. But, said Tennant, "With these (new) operating rules, there will be some very definitive standards in terms of what information the physician will get back." Practices could have information on a patient's insurance plan in as little as 20 seconds.

Section 1104 Up Close

Much of the verbiage on administration simplification in the Affordable Care Act deals with creating operating rules, which are defined in the law as "the necessary business rules and guidelines for the electronic exchange of information."

For example, the secretary of HHS is charged with adopting standards and associated operating rules for financial and administrative transactions that, among other things,

  • determine a patient's insurance plan eligibility and financial responsibility for services before or at the point of care;
  • are comprehensive and require only minimal augmentation by paper or other communications;
  • provide for timely acknowledgement, response and status reporting;
  • support a transparent claims and denial management process that includes adjudication and appeals; and
  • describe all data elements in easy-to-understand terms and prohibit additional conditions.

According to the law, HHS must find ways to reduce the clerical burden on patients and health care providers by reducing the number of forms -- as well as the complexity of paper and electronic forms -- in the current health care system. In addition, HHS must promulgate a final rule to establish a unique identifier for health plans, and that rule must be in effect no later than Oct. 1, 2012.

HHS also is charged with adopting a single set of operating rules to uniformly implement electronic standards. These rules will have to be consensus-based, reflect appropriate business rules affecting health plans and health care professionals, and comply with already established HIPAA standards.

According to the law, a nonprofit entity chosen by HHS will oversee development of the operating rules. That entity will be bound by specific restrictions that will require it to develop a consensus-based process that includes input from health plans, health care professionals, vendors, federal agencies and standards development organizations.

The entity also must conduct transparent processes that allow for public review and updates of the operating rules. Reviews and recommendations of proposed rules will fall under the purview of the National Committee on Vital and Health Statistics, which advises the HHS secretary.

The law makes it clear that physicians must be part of the process of setting the operating rules for administrative simplification, and it specifically states that the HHS secretary will have "ensured consultation with providers."

AAFP Involvement in Administrative Simplification Runs Deep

For years, the AAFP "has been significantly involved in efforts to minimize the day-to-day hassles of physicians' work," according to Laura Schmidt, a private sector advocacy specialist at the Academy. And now, she notes, changes called for in the Patient Protection and Accountable Care Act "will go a long way toward eliminating the waste and hassles in the health care delivery system."

Schmidt has been a member of the Council for Affordable Quality Health Care's Committee on Operating Rules for Information Exchange, or CORE, rules workgroup since 2005. "It was the CORE rules that got the train rolling when it comes to electronic transfer of information, and the new law puts some teeth into those rules," she says.

In 2005, the AAFP, the Medical Group Management Association and the American Health Information Management Association joined forces to create the Healthcare Administrative Simplification Coalition, a collaborative that advocated for many of the provisions that ended up in the Accountable Care Act.

As recently as July, (then) AAFP Board Chair Ted Epperly, M.D., of Boise, Idaho, fired off a letter to the National Committee on Vital and Health Statistics to ensure that attendees at an upcoming hearing on national health plan identifiers would have the benefit of the Academy's perspective.

"The assignment of a unique, universal identification number to each health plan should lead to simplification in identifying the entity that issues coverage," wrote Epperly. He urged the committee to consider physicians' needs before making any formal recommendations. And he called for a health plan identification system that would be inexpensive, easy for physicians to use and easy to update.

Onus on Health Plans to Comply

Section 1104 of the Affordable Care Act also contains details about how health plans will be required to comply with standards and operating rules. For example, insurers will have to file statements with HHS certifying that they are ready for compliance as the deadline for each set of standards and operating rules approaches.

Documentation of this compliance will be tightly controlled. For instance, a health plan will not be considered to have provided adequate documentation and will not be certified as being in compliance with standards that deal with electronic transactions unless it

  • demonstrates to HHS that it is complying fully with the regulation and
  • provides documentation showing that the plan "has completed end-to-end testing for such transactions with their partners, such as hospitals and physicians."

The law gives HHS the power to conduct periodic audits to ensure health plans are in compliance, and it authorizes HHS to assess penalty fees of $1 per covered life against any health plan that fails to meet certification requirements. The penalty "shall be imposed against the health plan for each day that the plan is not in compliance."

In addition, health plans will be doubly penalized for knowingly providing inaccurate or incomplete information to HHS, which also will establish a review committee by Jan. 1, 2014, to conduct hearings beginning on April 1, 2014, and "not less than biennially thereafter" to evaluate and review adopted standards and operating rules.

Call to Action for Physicians

According to Tennant, the administrative simplification clauses in the Accountable Care Act are good news, but they will be meaningless if physicians don't do their part. "These standards, although incredibly important, will be wasted unless physician practices adopt the technology that allows them to take advantage of these standards," Tennant said.

He encouraged family physicians to look at the administrative simplification rules as an opportunity. "These new standards and operating rules will really simplify all of the hassle points -- things like patient eligibility and submitting claims and getting remittances. But practices have to have the technology in place in order to take advantage of this," said Tennant.

Cynthia Hughes, C.P.C., an AAFP coding expert, told AAFP News Now that members should focus -- for now -- on preparing their practice management systems to conduct transactions in the HIPAA 5010 format, which will be implemented Jan. 1, 2012. "This change requires an upgrade to the practice management or claims system," said Hughes.

She also urged family physicians to consider long-range budgeting for additional upgrades to software and for such hardware as card readers and bar-code scanners. "This technology should become more easily integrated with practice management and (electronic health record) systems in the next three years," she noted.