SECRETARY'S ADVISORY COMMITTEE ON REGULATORY REFORM REGIONAL HEARING #4
MEETING MINUTES/SUMMARY 

DAY ONE

May 15, 2002
Marriott City Center
Colorado Room
Denver, Colorado

Ms. Adair, director of the Office of Operations Management, and Ms. Trudel, director of the HIPAA Project Staff, discussed the intent of the Health Insurance Portability and Accountability Act (HIPAA). Its administrative simplification provisions aim to lesson the burden providers face when having to work with multiple systems for electronic health care claims. It also promotes the switch from paper forms to electronic transactions. The standard-setting process involves extensive consultation with providers and insurers, and the federal government aims to adopt industry standards where they are available. The timing of the new standards has been an issue, and the Centers for Medicare & Medicaid Services (CMS) understands industry’s desire to get the regulations published quickly. Currently, there is an October 2002 deadline to comply with standards for transactions and codes sets, but covered entities are allowed to get a one-year extension.

Q&A

The committee and the panelists discussed the rulemaking process for HIPAA standards, upcoming deadlines for compliance and lead times that industry needs, transaction codes for long-term care, and the difficulties health plans face when trying to implement multimillion-dollar systems changes in an uncertain rulemaking environment.

Mr. Lazarus, the workgroup’s chairman, said government collaboration with the industry to set standards has worked well, but the rulemaking process has broken down. WEDI started in 1991 as a steering committee that morphed into a non-profit trade association, currently with 213 organizational members. They are very frustrated with delays in updates to the transaction rules, which are currently under review at the Office of Management and Budget (OMB). The delays, which have hampered even non-controversial changes, could significantly disrupt members’ cash flow and force providers to get compliance extensions. The process is broken, he said, and needs to be fixed. WEDI’s board recommends making the rulemaking process more predictable, shortening the time period for changes by removing "minor maintenance" changes from the full rule review, appointing a high-level official in HHS to take charge of HIPAA, convening a joint WEDI-government task force to work out improvement options, and making greater use of WEDI expertise.

Christine Jenson, Denver Health

Ms. Jenson, a senior analyst for information systems, said her public hospital does many transactions with Medicare and Colorado Medicaid. While administrative simplification has the potential to increase efficiency, the implementation process needs to be improved. It needs to be faster, and new rules should be released in a coordinated way to spare providers the inefficiency of multiple rounds of implementation, testing and re-tooling. The forthcoming security rule is an example of this. Some of entities that hospitals deal with are not covered under HIPAA, including auto insurers, worker’s compensation insurance carriers and homeowners who pay for an accident in the home. This gap in the statute could present difficulty for hospitals. Also, hospitals will need the ability to do real-time transactions for insurance eligibility checks, rather than batch transactions, which are better suited to insurance claims. External data systems should be integrated with the hospital’s system to prevent data-entry errors. Health plans that have received HIPAA compliance extensions have put work on "trading partner" agreements on the back burner; they should start working on those now.

Carolyn Bruce, Western Healthcare Alliance

Ms. Bruce, executive director, said her group is a non-profit organization aimed at fostering collaboration between providers on issues such as HIPAA implementation. Collaboration is important to save money, since many of her members are rural providers and are operating in the red. Many providers are unaware of the changes HIPAA has in store for them. These providers need a long lead time to comply. They also need capital to modernize their information systems. She recommended putting a high-level person in charge of HIPAA at HHS, making money available for rural implementation, and issuing final rules as soon as possible, so her consultants don’t have to re-write rules, policies, and forms every time they change.

Dr. Licona, a family practitioner with a migrant community health center in Colorado, said HIPAA presents risks to his practice. It requires significant upgrade and replacement of office software and accounting systems for physician practices. The transition toward unified information systems threatens to disrupt services and harm patient access to safety-net providers. The software market for these systems is chaotic, with small, proprietary operators making dubious claims that their products are HIPAA compliant. It is difficult for providers to evaluate the various software packages. He recommends that HIPAA be extended to more parties, and that vendors and payers be required to implement the same standards.

Mr. Heird, a senior vice president, said it was remarkable that only two sets of rules have been published in the six years since HIPAA passed. Plans are still waiting on rules for security, identifiers, and other standards. The implementation of HIPAA has lost sight of the mission to simplify the system. Changes to information systems have ripple effects on the rest of a plan’s business, which are often poorly understood by the government. Chaotically implemented changes threaten to create "emotional blockage" among organizations, which become hesitant to move forward because of the uncertainty. He recommended that a multi-disciplinary industry group do cost-benefit analysis before any new rules are adopted. All rule changes should be postponed until the first round of implementation is successful. HHS approval of HIPAA rules should be streamlined and faster.

Q&A

The committee and the panel discussed what entities the HIPAA statute covers, the application process for HIPAA compliance extensions, the adoption of drug codes, and conflicts between HIPAA and other laws such as ERISA and state prompt-pay laws.

9:45 a.m. break

9:55 a.m. resume, Committee Business

The committee unanimously approved rules governing its process for making formal recommendations. These include defining a quorum as 50 percent plus one of the Advisory Committee members – that is, 16 members must be present at the meeting for voting to occur. A recommendation requires a two-thirds majority of those present for adoption, and any members’ concerns or disagreements with a recommendation will be noted in the report to the Secretary.

The subcommittees presented their consent agenda of recommendations: Data and Information (Tony Fay, chairman), Regulatory Flexibility (Heidi Margulis, chairwoman), and Communication and Oversight (Erik Olsen, chairman). The committee’s decisions may be found at http://www.regreform.hhs.gov/recommendations.htm. (Note: The tables in the linked document reflect the final status of the recommendations at the end of the Denver meeting. Some changes were discussed and voted on during day two).

12:25 p.m. break for lunch

The Coordination Subcommittee, Jack Rovner, chairman, presented the recommendations on its consent agenda. The full committee took the actions described in the tables at http://www.regreform.hhs.gov/recommendations.htm

2:05 p.m. public comment

Dr. Jane Orient, with the Association of American Physicians and Surgeons, said she is a plaintiff against HHS in a lawsuit on the privacy rule. A huge volume of regulations has come out under the guise of "administrative simplification," she said, and doctors are responsible for knowing them or face jail time for violations. Some providers have more than 1,000 business associates, which are covered by special rules. The rule writers at HHS have no experience working at hospitals. HIPAA will destroy some physician practices and harm the trust between doctors and patients.

Linda Gorman, with the Independence Institute, a free-market think tank in Colorado, said HHS’s command-and-control style is reminiscent of Canada or the former Soviet Union, she said. The way the Medicare and Medicaid programs are managed, with price administration based on "Marxist formulas," needs to be changed. Regarding HIPAA, patients’ consent should be required before records are disclosed, and there should be an "exploding date" where shared data is destroyed.

Jaime Smith, with Intercare, said he spent 40 years in hospital and long-term-care management. He was concerned that the committee lacks representation from long-term care. Nursing home care is over-regulated in the U.S. Long-term care should move to a "social model" used in Denmark.

Robert Lapp, director of dental informatics with the American Dental Association, said HIPAA transaction codes could save the typical dentist around $200 a week, which is about three percent of the cost of delivering dental care. He urged the committee to push for the release of HIPAA transactions addenda.

Steve Lazarus, WEDI, who spoke to the committee as a morning panelist, said his group conducted a provider survey on HIPAA administrative simplification. It found that HIPAA could save physicians about 2.9 percent of their revenue and could provide 2.5 percent revenue savings for hospitals.

Kathleen Brennan, executive director of the Colorado Society of Osteopathic Medicine, said osteopaths, who often operate in small or solo practices, need less regulation. HIPAA is expected to cost physicians $15,000-$20,000 per year. That and other factors pressuring doctors will limit access to care. HHS should keep in mind that each guideline it issues must be complied with thousands of time over.

2:30 p.m. Committee discussion

The committee discussed HIPAA administrative simplification. Issues included whether HHS has a "HIPAA czar" to coordinate implementation, other HHS efforts to coordinate the rules, and health payers not covered by the HIPAA statute.

Dr. Wood announced that Christy Schmidt is retiring from HHS and will leave the agency and the Advisory Committee in early June. Margaret (Peggy) Sparr will assume Ms. Schmidt’s role leading up the staff work for the committee. Ms. Schmidt received a standing ovation from committee members. She commended the committee on its hard work.

2:50 p.m. Adjourn for day, site visits

Meeting summary prepared by John McCoy, Health Policy Analyst Mathematica Policy Research, Inc.