[Congressional Record (Bound Edition), Volume 147 (2001), Part 20]
[Extensions of Remarks]
[Pages 28149-28150]
[From the U.S. Government Publishing Office, www.gpo.gov]



LEGISLATIVE HISTORY AND INTENT CONCERNING H.R. 3323, THE ADMINISTRATIVE 
                     SIMPLIFICATION COMPLIANCE ACT

                                 ______
                                 

                         HON. WILLIAM M. THOMAS

                             of california

                         HON. CHARLES B. RANGEL

                              of new york

                         HON. NANCY L. JOHNSON

                             of connecticut

                        HON. FORTNEY PETE STARK

                             of california

                          HON. DAVID L. HOBSON

                                of ohio

                    in the house of representatives

                       Thursday, January 3, 2002


                  Background and Need For Legislation

  Mr. THOMAS. Mr. Speaker, the administrative simplification provisions 
of the Health Insurance Portability and Accountability Act (HIPAA) of 
1996 will improve administrative efficiencies in the health care market 
by facilitating electronic transactions between covered entities--
health plans, clearing houses and health care providers. Indeed, the 
Department of Health and Human Services estimated that administrative 
simplification will save $29.9 billion over 10 years as a result of 
increased efficiencies.
  Many covered entities believed coming into compliance with the 
October 16, 2002 deadline set by the regulations implementing the 
transactions and code set standards required by HIPAA was an 
insurmountable hurdle. As such, they argued that a one-year delay in 
implementing the standards was necessary.
  The Committee was concerned, however, that a one-year delay in the 
implementation of these standards had the potential to result in an 
indefinite delay, as advocates for the status quo would present more 
excuses next year in asking for an additional extension, which could 
lead to indefinite extensions. The Committee also believes entities 
should undertake actions to prepare to come into compliance.
  However, a number of covered entities presented legitimate reasons 
why they could not come into compliance by the October 2002 deadline, 
and the Committee determined legislative action was necessary.


                               H.R. 3323

  The House and Senate passed legislation, H.R. 3323, the 
Administrative Simplification Compliance Act, to address this issue and 
to provide a glide path for covered entities to come into compliance.
  Specifically, the legislation requires that any entity that has not 
come into compliance by the October 2002 deadline may receive a year 
extension if they submit a compliance plan with the Secretary 
demonstrating how they will come into compliance within the next year. 
The compliance plan forces entities to think deliberatively through 
what it will take to come into compliance and to go on record with the 
Secretary that they intend to come into compliance. The bill also 
requires the Department of Health and Human Services to issue model 
compliance plans, which include critical benchmarks such as 
establishing a compliance budget, a work plan and an implementation 
strategy for coming into compliance. The Secretary is not required to 
approve the compliance plans (as this would compel a review and 
decision on millions of applications), yet is required to widely 
disseminate reports containing effective solutions to compliance 
problems identified in the compliance plans.
  Finally, to provide a disincentive to going back to paper claims, the 
bill requires covered entities to submit electronic Medicare claims to 
the Centers of Medicare and Medicaid Services (CMS) as a condition of 
payment. The Committee does not foresee this requirement as being 
problematic in any way since 98 percent of Part A providers and 85 
percent of part B providers already submit claims electronically. In 
addition, the legislation has exceptions from the electronic submission 
requirement for cases in which no method is available for the 
submission of claims other than in written form and for small providers 
(defined as having fewer than 25 full time equivalent employees for 
facilities or 10 for physician practices).
  In submitting the Committee's legislative intent, the authors make 
the following specific observations.


                            Additional Time

  The Committee encourages those entities that can reasonably become 
compliant with the original October 16, 2002 deadline for electronic 
transactions and code sets to continue their efforts. It is the clear 
intent of the Committee that the additional twelve-month extension not 
delay compliance efforts already underway.
  The Committee also encourages the Department to not penalize a 
compliant entity that must send non-compliant transactions because 
their trading partners have filed for the extension. This should be 
considered ``good cause'' for non-compliance pursuant to Sec. 1176(3) 
of the HIPAA law.


                        Summary Compliance Plans

  The Committee intends that the plan submitted to the Secretary under 
Section 2(a)(2) of the bill will be a minimal reporting requirement. 
The plan will provide summary information regarding the work to be 
completed for the covered entity to be compliant with the transactions 
and code set standards by October 2003. The Committee intends that 
submission of a compliance plan will force covered entities to analyze 
and consider the exact steps needed to ensure compliance with the 
regulation by the compliance date, and to achieve those steps.
  In preparing the plan, it is important for the covered entity to 
generally indicate that it has or will begin, accomplish, or is working 
towards completing, a particular task, in addition to the summary 
information relating to the task itself.


                  Model Form and Timing of Submission

  If a covered entity so chooses, it may use the model form promulgated 
by the Department of Health and Human Services (HHS), or it may provide 
the information in an alternative format at any time prior to October 
16, 2002. Entities do not need to wait until HHS promulgates a model 
form in order to file a compliance plan. The model form promulgated by 
HHS should be concise, and the Committee

[[Page 28150]]

encourages the Department to immediately post the mailing and 
electronic submission address for extension filings on their website.
  The Committee recognizes that compliance with respect to long-term 
care insurers and providers has been delayed by the absence of standard 
code sets for long-term care services. The Committee also recognizes 
that long-term care covered entities have been working diligently with 
the Secretary to correct this problem. The Committee encourages the 
Secretary, when issuing the model form, to provide guidance regarding 
the form's submission that addresses the unique situation facing long-
term care insurers and providers.


                          Report and Analysis

  It is the Committee's intent in enacting this legislation that the 
National Committee on Vital and Health Statistics (NCVHS) will perform 
analysis of compliance extension plans, conduct hearings, and 
disseminate reports to HIPAA covered entities.
  The Committee realizes that clearinghouses, the vendors of software 
programs and computer services, and the vendors of remediation services 
will play a role in helping providers and plans come into compliance 
with the transactions and code set standards as well as the other 
administrative simplification standards. The Committee expects the 
Secretary and the NCVHS to consult with all entities listed in the 
statute and the vendor community or their representatives directly.
  The Committee intends that information provided in compliance plans 
will be redacted when provided to NCVHS so as to prevent the disclosure 
of trade secrets, commercial or financial information that is 
privileged or confidential. The Committee, however, believes that a 
covered entity that has submitted a compliance plan should inform as 
many of its trading partners as possible of the anticipated timelines 
for its compliance activities, including its schedule for beginning 
testing, in order to avoid confusion.


             Scope and Application of Confidentiality Rule

  In this legislation, the Committee has sought to ensure that entities 
become compliant with the April 14, 2003 HIPAA confidentiality 
requirements despite the fact that the final transaction standards will 
not be effective until six months later. With regard to clearinghouses, 
the Committee appreciates that there are healthcare information 
technology vendors, such as applications service providers (ASPs) that 
create, adjudicate and process claims in other ways than converting 
data into standard transactions formats other than HIPAA standardized 
formats. The Committee does not intend to create any new covered 
entities under any of the HIPAA rules during this time.
  The Committee does not intend to modify the April 14, 2003 effective 
date of the confidentiality regulation in this legislation.


                         Filing of Paper Claims

  This legislation requires the electronic filing of claims with 
Medicare, with exceptions. It is not the intent of the Committee to 
preclude a Medicare beneficiary from submitting a paper claim for 
covered services. Although virtually all Medicare claims are filed on 
behalf of a beneficiary by the provider rendering services, there are 
situations where a beneficiary receives a covered service by a non-
Medicare enrolled provider and would, therefore, be eligible for 
reimbursement. Such claims are likely to be filed on paper, and nothing 
in this legislation should be construed as preventing the filing of a 
paper claim Medicare claim directly by a beneficiary.


                     Completion of Additional Rules

  The Committee strongly encourages the Department of Health of Human 
Services to complete, in final form, the outstanding rules provided for 
in the original statute, namely the provider identifier, plan 
identifier, and employer identifier. Congress also strongly encourages 
the Department to issue the final security and electronic signatures 
regulation.


                          Use of Authorization

  The Committee intends the authorization of funds included in Section 
5 would be used to speed the issuance and final promulgation of all 
HIPAA administrative simplification rules. In addition, the 
authorization is not intended to be used for direct individual 
compliance activities of covered entities, but to broadly provide 
technical and educational assistance. Because the Committee expects 
timely compliance by the private sector with these standards, the 
Committee wants the Secretary to issue the model form in a timely 
manner. Failure to meet the deadline outlined in the legislation 
jeopardizes authorized funds.

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