Healthcare Insurance and HIPAA
This section contains a brief review of the basic concepts and terminology of the healthcare insurance industry and HIPAA (Health Insurance Portability and Accountability Act of 1996), which is needed to effectively use the Microsoft BizTalk Accelerator for HIPAA. Readers with experience in these areas may want to jump ahead to the section “What Is the Microsoft BizTalk Accelerator for HIPAA?” to begin learning immediately about product features.
The Business of Healthcare Insurance
The chief purpose of healthcare insurance is to protect people against the financial impact and consequences of accidents and disease. In the United States this is accomplished by a complex system of private insurance companies and government agencies, but in some countries around the world it is provided largely if not entirely through government agencies. Many of the basic concepts in this chapter will be applicable to healthcare systems outside the United States because of the universal need for efficient industry standards-based electronic information exchange to control costs and improve quality.
The basic business processes of the healthcare insurance industry are built around creating benefits offerings, selling policies (that is, contracts) to consumers or purchasing groups for delivery of those benefits offerings, collecting premium payments, and investing those premiums over time. When policy subscribers have healthcare or accident-related events requiring services, payments are made to the providers of those services (for example, physicians and hospitals). Insurance companies are successful when they are able to spread the burden of financing the care rendered for a few across the premiums collected from the large population. More recently, the industry as a whole has become much more interested in management of this financial risk and has evolved procedures for more closely monitoring use of expensive resources to control costs.
Many healthcare organizations recognize the benefits of electronic data exchange, but the lack of a single, universally adopted industry standard has resulted in proliferation of many proprietary data formats and has limited the potential benefits of automation within the industry. Although the healthcare insurance industry was an early adopter of computer technology for automation of internal data processing, it has only recently adopted Electronic Data Interchange (EDI) standards for cross-organization business, lagging behind other industries such as transportation, retail, and manufacturing.
What Is HIPAA?
HIPAA is comprehensive U.S. Federal legislation whose primary purpose is to ensure that workers and their families do not lose healthcare insurance benefits when they change or lose their jobs. The following discussion introduces some basic terms and concepts of the healthcare insurance industry and HIPAA as background for learning about the features of the Microsoft BizTalk Accelerator for HIPAA solution.
This brief summary should not to be used as a substitute for direct study of the HIPAA regulations and the X12N Implementation Guides, and should not be used as a basis for determining whether a given implementation meets HIPAA compliance as defined by the regulations. It is strongly recommended that the services of a qualified HIPAA and EDI consultant be retained when planning and deploying solutions with the Microsoft BizTalk Accelerator for HIPAA if the appropriate levels of skill in EDI implementation and understanding of HIPAA are not available within the implementation team. The HIPAA regulations may be found at http://aspe.os.dhhs.gov/admnsimp/. The latest version of the Implementation Guides may be found at http://www.wpc-edi.com/hipaa/HIPAA_40.asp.
Administrative Simplification
The Administrative Simplification section of HIPAA is a separate piece of legislation intended to reduce the cost and complexity of administrating healthcare by using standardized electronic interchanges among the various entities involved in healthcare business transactions. It provides support for the overall HIPAA legislation by establishing standards for electronic data exchange within the healthcare industry. Only widespread implementation of such standards will make possible true portability of the administrative and clinical information needed for continuity of benefits and care.
Covered Entities
The Administrative Simplification regulations of HIPAA apply to three classes of entities:
Providers
Payers
Clearinghouses
Providers are organizations or individuals that deliver healthcare services for patients or members enrolled in healthcare plans, or who hold individual health insurance policies. Examples of providers are physicians, nurses, clinics, hospitals, diagnostic laboratories, and long-term care facilities.
Payers are typically insurance organizations or governmental agencies that finance the delivery of healthcare services. They enroll members, collect premium payments from individual subscribers or from sponsoring organizations such as employers, and administrate the payment of providers for services delivered. Examples of payers are insurance companies, health plans, State Medicaid agencies, and Health Maintenance Organizations (HMOs).
Clearinghouses are entities that provide value-added connectivity, data formatting, validation, transformation, and routing services to facilitate information transfer between providers and payers.
The HIPAA Administrative Simplification regulations may under certain circumstances also apply to third-party business associates who are performing services on behalf of the three covered entities.
Note
Discussion of the precise definitions and applicability of these regulations to third-party entities is outside the scope of this chapter.
There are four parts of the Administrative Simplification regulations:
National Provider Identifiers
Security
Privacy
Transactions
The discussion will be limited in this chapter to the area of transactions. For a detailed discussion of Microsoft BizTalk Server 2000 security configuration, see Chapter 22 “Security.” Visit the U.S. Department of Health and Human Services Web site to read the Proposed and Final Rules and for more information on HIPAA Administrative Simplification at http://aspe.os.dhhs.gov/admnsimp/.
Transactions
The HIPAA legislation specifies a set of transactions that must be used by covered entities when exchanging electronic information. These transactions are specified by the ANSI ASC X12N version 4010 Implementation Guides published by Washington Publishing Company. Table 24.1 contains a list of the names and descriptions of the transactions.
These transaction standards must be implemented by all covered entities by no later than Oct 16, 2002. Small health plans whose annual receipts are not greater than $5 million have one additional year to achieve compliance.
The specified transaction set will be updated at regular intervals according to the regulations. Changes expected in the near future include additional transaction standards (for example, the forthcoming Healthcare Claim attachment transaction) and adoption of newer versions of the standard itself (for example, the forthcoming change to the version 4050 ASC X12N standard).
The precise specifications defining how the transactions must be implemented are contained in the ANSI ASC X12N HIPAA Implementation Guides published by Washington Publishing Company and available for free download after registration at http://www.wpc-edi.com/hipaa/HIPAA_40.asp. Gaining familiarity with the contents of these guides and developing experience in reading and interpreting them is strongly recommended before attempting to design or implement solutions for HIPAA scenarios. Table 24.2 contains a list of the Transaction Guides and the specific transaction sets.
| Transaction Set | Guide ID | Guide Name |
|---|---|---|
| 270/271 | 004010X092 | Health Care Eligibility/Benefit Inquiry and Information Response |
| 276/277 | 004010X093 | Health Care Claim Status Request and Response |
| 278 | 004020X094 | Health Care Services Review—Request for Review and Response |
| 820 | 004010X061 | Payroll Deducted and Other Group Premium Payment for Insurance Products |
| 834 | 004010X095 | Benefit Enrollment and Maintenance |
| 835 | 004010X091 | Health Care Claim Payment/Advice |
| 837 | 004010X096 | Health Care Claim: Institutional |
| 837 | 004010X097 | Health Care Claim: Dental |
| 837 | 004010X098 | Health Care Claim: Professional |
These guides are the definitive standard for implementation and represent the criteria by which an organization will be judged from a compliance perspective in the area of transactions. They contain precise definitions of all terms, data types, X12N syntax, data structures, situational rules, and examples of use for each transaction.
Using the HIPAA Transaction Set
Covered entities will use the HIPAA Transaction sets to automate essential core business processes. Four common scenarios for use are presented in this section:
Enrollment
Eligibility
Authorization
Claims processing
Note that these simple scenarios do not represent the only ways that the HIPAA transaction sets may be used within the healthcare industry. Many real-world scenarios combine different transactions to solve end-to-end business workflows. For more information on how to use the X12N Transaction sets in healthcare, see Health Care EDI Transactions: A Business Primer, published by Washington Publishing Company, located at http://www.wpc-edi.com/models/PrimerHome.html. Also, the first section (entitled “1. Purpose and Business Overview) within each ANSI ASC X12 HIPAA Implementation Guide describes the purposes for which the transaction may be used and provides examples illustrating proper use.
Enrollment
Enrollment is a core business process within payer organizations and large sponsors. As part of the hiring process, new employees will typically select a particular health plan and benefits package associated with a policy held by the employer, who acts as the sponsor of the plan. The Human Resources Benefits group of the sponsor may manage the demographic and policy benefits information within an Enterprise Resource Planning (ERP) system, or it may be outsourced to a third-party administrative party. Payers may use the ASC X12N 834 Benefit Enrollment and maintenance transaction to accept membership list transfers from plan sponsors such as employers who maintain this information in electronic form. Membership lists may also be transferred from the payer to other third-party administrative organizations such as pharmacy benefits administrators using the 834 transaction set. Figure 24.1 shows how the 834 Enrollment transaction may be used in the enrollment scenario.
Figure 24.1. Enrollment and the 834.
Eligibility Verification
Eligibility verification is the process of determining whether an individual requesting medical services has applicable coverage (benefits) under the terms of a given healthcare plan. It will be most frequently initiated by providers (physicians, hospitals, diagnostic laboratories) who want to determine in advance of a patient visit whether they will be paid by the insurance company for services to be delivered. The ASC X12N 270 Health Care Eligibility/Benefit Inquiry transaction contains the “request” sent to the payer. This transaction may be used in “real-time” mode, being initiated from a clinic or diagnostic laboratory where a response is expected in a short amount of time as with a credit card verification. Alternatively, it may be used in a periodic scheduled update mode where local application data stores receive updated benefits and eligibility information on a daily, weekly, or monthly basis. The response is contained in the ASC X12N 271 Health Care Eligibility/Benefit Information transaction. Figure 24.2 shows how the 270 and 271 transaction set may be used in the eligibility scenario.
Figure 24.2. Eligibility and the 270/271.
Authorization
Providers and payers use the authorization process to monitor and provide a measure of control over the use of expensive services such as specialty consultations, hospital procedures, and diagnostic testing. The ASC X12N 278 Health Care Services Review transaction set may be used in either “real-time” or batch mode to automate the authorization process depending on the business requirements. Figure 24.3 shows how the 278 transaction may be used in the authorization scenario.
Figure 24.3. Authorization and the 278.
Claims
The claims process is typically initiated by a provider organization (hospital, clinic, physician, diagnostic laboratory) by preparation of a bill (claim) to a payer for services delivered for a given patient. The ASC X12N 837 Health Care Claim transaction comes in three variants for submitting bills electronically to payers under HIPAA depending on the kind of services being delivered. The three transactions are as follows:
837 Health Care Claim: Professional
837 Health Care Claim: Institutional
837 Health Care Claim: Dental
The 837 Professional Claim (often denoted as the 837P) is typically used by physicians, the 837 Institutional Claim (837I) is used by hospitals and chronic care facilities, and the 837 Dental Claim (837D) is used by dental offices.
The ASC X12N 835 Health Care Claim Payment/Advice transaction provides the provider who submitted the 837 with the summary of the financial transaction. This includes items of financial interest such as the amount paid, the amount not paid, any adjustments, and so forth. This statement is often referred to as the Explanation of Benefits (EOB).
The ASC X12N 276 Request for Health Care Claim Status and the ASC X12N 277 Health Care Claim Status Response may be used by providers and payers to determine the processing status of a previously submitted claim.
Figure 24.4 shows how the 835, 837, 276, and 277 transactions may be used within the claims processing scenario.
Figure 24.4. Claims processing and the 837, 835, 276, and 277 transactions.
