[Federal Register Volume 87, Number 244 (Wednesday, December 21, 2022)]
[Proposed Rules]
[Pages 78438-78468]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-27437]



[[Page 78437]]

Vol. 87

Wednesday,

No. 244

December 21, 2022

Part V





Department of Health and Human Services





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Office of the Secretary





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45 CFR Parts 160 and 162





Administrative Simplification: Adoption of Standards for Health Care 
Attachments Transactions and Electronic Signatures, and Modification to 
Referral Certification and Authorization Transaction Standard; Proposed 
Rule

  Federal Register / Vol. 87, No. 244 / Wednesday, December 21, 2022 / 
Proposed Rules  

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of the Secretary

45 CFR Parts 160 and 162

[CMS-0053-P]
RIN 0938-AT38


Administrative Simplification: Adoption of Standards for Health 
Care Attachments Transactions and Electronic Signatures, and 
Modification to Referral Certification and Authorization Transaction 
Standard

AGENCY: Office of the Secretary, Department of Health and Human 
Services (HHS).

ACTION: Proposed rule.

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SUMMARY: This rule would implement requirements of the Administrative 
Simplification subtitle of the Health Insurance Portability and 
Accountability Act of 1996 (HIPAA) and the Patient Protection and 
Affordable Care Act, as amended by the Health Care and Education 
Reconciliation Act of 2010, enacted on March 30, 2010--collectively, 
the Affordable Care Act. Specifically, this proposed rule would adopt 
standards for ``health care attachments'' transactions, which would 
support both health care claims and prior authorization transactions, 
and a standard for electronic signatures to be used in conjunction with 
health care attachments transactions. To better support the use of the 
proposed standards for attachments transactions with prior 
authorization transactions, this rule also proposes to adopt a 
modification to the standard for the referral certification and 
authorization transaction (X12 278) to move from Version 5010 to 
Version 6020.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on March 21, 2023.

ADDRESSES: In commenting, please refer to file code CMS-0053-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of three ways (please choose only 
one of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-0053-P, P.O. Box 8013, 
Baltimore, MD 21244-1850.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-0053-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Daniel Kalwa, (410) 786-1352. Geanelle 
G. Herring, (410) 786-4466. Christopher Wilson, (410) 786-3178.

SUPPLEMENTARY INFORMATION:
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following 
website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to 
view public comments. CMS will not post on Regulations.gov public 
comments that make threats to individuals or institutions or suggest 
that the individual will take actions to harm the individual. CMS 
continues to encourage individuals not to submit duplicative comments. 
We will post acceptable comments from multiple unique commenters even 
if the content is identical or nearly identical to other comments.

I. Executive Summary

A. Purpose

    This rule proposes to adopt a set of standards for the electronic 
exchange of clinical and administrative data to support prior 
authorizations and health care claims adjudication. In determining the 
necessity of a health care service as part of making a coverage 
decision, health plans often require additional information that cannot 
adequately be conveyed in the specified fields or data elements of the 
adopted prior authorization request or health care claims transaction. 
If adopted as proposed, this proposed rule would support electronic 
transmissions of this type of information, which should have the effect 
of decreasing the use of time and resource-consuming manual processes 
such as mail or fax often used today to transmit this information. This 
would facilitate prior authorization decisions and claims processing, 
reduce burden on providers and plans, and result in more timely 
delivery of patient health care services.
a. Need for the Regulatory Action
    This rule would adopt a set of standards for the electronic 
exchange of clinical and administrative data to support prior 
authorizations and claims adjudication. Despite widespread deployment 
of electronic health records (EHRs), and industry experience with 
Health Insurance Portability and Accountability Act of 1996 (HIPAA) 
standards that continues to advance since HIPAA's advent, transmitting 
health care attachments is still primarily a manual process and, at 
this time, there are no adopted HIPAA standards, implementation guides, 
or operating rules for health care attachments or electronic 
signatures. If adopted, this proposed rule would support electronic 
transmissions of this type of information rather than the use of manual 
processes such as mail and fax that still predominate in the health 
care industry.
    We believe that the health care industry has long anticipated the 
adoption of a set of HIPAA standards for the electronic exchange of 
clinical and administrative data to support electronic health care 
transactions, such as prior authorization of services and claims 
adjudication, and the standards we are proposing to adopt are an 
important step in reducing provider burden.

B. Summary of the Major Provisions

    This rule would implement requirements of the Administrative 
Simplification subtitle of HIPAA and the Patient Protection and 
Affordable Care Act, as amended by the Health Care and Education 
Reconciliation Act of 2010, enacted on March 30, 2010--collectively, 
the Affordable Care Act. Specifically, this proposed rule would adopt 
standards for ``health care attachments'' transactions, which would 
support health care claims and prior authorization transactions, and a 
standard for electronic signatures to be used in conjunction with 
health care attachments transactions. This rule also proposes modifying 
the referral certification and authorization transaction standard to 
move from the X12 278, Version 5010, to the X12 278, Version 6020.

C. Summary of Costs and Benefits

    Based on industry research by the Council for Affordable Quality

[[Page 78439]]

Healthcare (CAQH), the 2019 CAQH report indicates that a fully 
electronic system for prior authorization with health care attachments 
could result in as much as $454 million in annual savings to the health 
care industry. Similar savings can be expected for the industry by 
switching to health care attachments for claims. The 2019 CAQH report 
further estimates that the industry could expect as much as $374 
million in savings per year with the full adoption of health care 
attachments for claims. This results in total anticipated industry 
savings of $828 million per year for prior authorization and claims.

II. Background

A. Legislative Authority for Administrative Simplification

    This background discussion presents a history of statutory 
provisions and regulations that are relevant for the purposes of this 
proposed rule.
1. Standards Adoption and Modification Under the Administrative 
Simplification Provisions of the Health Insurance Portability and 
Accountability Act of 1996 (HIPAA)
    Congress addressed the need for a consistent framework for 
electronic transactions and other administrative simplification issues 
in the Health Insurance Portability and Accountability Act of 1996 
(HIPAA) (Pub. L. 104-191, enacted on August 21, 1996). Through subtitle 
F of title II of HIPAA, Congress added to title XI of the Social 
Security Act (the Act) a new Part C, titled ``Administrative 
Simplification,'' which required the Secretary of the Department of 
Health and Human Services (the Secretary) to adopt standards for 
certain transactions to enable health information to be exchanged more 
efficiently and to achieve greater uniformity in the transmission of 
health information. For purposes of this and later discussion in this 
proposed rule, we sometimes refer to this statute as the ``original'' 
HIPAA provisions.
    Section 1172(a) of the Act indicates that any standard adopted 
under HIPAA shall apply, in whole or in part, to the following persons, 
referred to as ``covered entities'': (1) a health plan; (2) a health 
care clearinghouse; and (3) a health care provider who transmits any 
health information in electronic form in connection with a [HIPAA 
transaction]. Generally, section 1172 of the Act indicates that any 
standard adopted under HIPAA is to be developed, adopted, or modified 
by a standard setting organization (SSO). In adopting a standard, the 
Secretary must rely upon recommendations of the National Committee on 
Vital and Health Statistics (NCVHS), in consultation with the 
organizations referred to in section 1172(c)(3)(B) of the Act, and 
appropriate federal and state agencies and private organizations.
    Section 1172(b) of the Act indicates that a standard adopted under 
HIPAA must be consistent with the objective of reducing the 
administrative costs of providing and paying for health care. The 
transaction standards adopted under HIPAA enable financial and 
administrative electronic data interchange (EDI) using a common 
structure, as opposed to the many varied, often proprietary, 
transaction formats on which industry had previously relied and that, 
due to lack of uniformity, engendered administrative burden. Section 
1173(g)(1) of the Act, which was added by section 1104(b) of the 
Affordable Care Act, further addresses the goal of uniformity by 
requiring the Secretary to adopt a single set of operating rules for 
each transaction during the implementation of the electronic standards. 
These operating rules are required to be consensus-based and reflect 
the business rules that affect health plans and health care providers 
and the manner in which they operate.
    Section 1173(a) of the Act indicates that the Secretary must adopt 
standards for financial and administrative transactions, and data 
elements for those transactions, to enable health information to be 
exchanged electronically. The original HIPAA provisions require the 
Secretary to adopt standards for the following transactions: health 
claims or equivalent encounter information; health claims attachments; 
enrollment and disenrollment in a health plan; eligibility for a health 
plan; health care payment and remittance advice; health plan premium 
payments; first report of injury; health claim status; and referral 
certification and authorization. The Affordable Care Act added the 
requirement that the Secretary adopt a standard for electronic funds 
transfers. Additionally, section 1173(a)(1)(B) of the Act requires the 
Secretary to adopt standards for any other financial and administrative 
transactions the Secretary determines appropriate.
    Section 1173(c) through (f) of the Act indicates the Secretary must 
adopt standards for code sets for appropriate data elements for each 
listed health care transaction; security standards for health care 
information; standards for electronic signatures in coordination with 
the Secretary of Commerce, compliance with which will be deemed to 
satisfy both state and federal statutory requirements for written 
signatures for the listed transactions; and standards for the 
transmission of appropriate standard data elements needed for the 
coordination of benefits, sequential processing of claims, and other 
data elements for individuals who have more than one health plan.
    Section 1174 of the Act requires the Secretary to review the 
adopted standards and adopt modifications to them, which include 
additions to the standards, as appropriate, but not more frequently 
than once every 12 months. Section 1174(b)(2)(B)(ii) of the Act 
requires that modifications must be completed in a manner that 
minimizes disruption and cost of compliance.
    Section 1175 of the Act prohibits health plans from refusing to 
conduct a transaction as a standard transaction.\1\ It also prohibits 
health plans from delaying the transaction, or adversely affecting or 
attempting to adversely affect, a person or the transaction itself on 
the ground that the transaction is in standard format. It establishes a 
timetable for covered entities to comply with any standard, 
implementation specification, or modification as follows: for an 
initial standard or implementation specification, no later than 24 
months (or 36 months for small health plans) following its adoption; 
for modifications, as the Secretary determines appropriate, but no 
earlier than 180 days after the modification is adopted.
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    \1\ Defined at 45 CFR 162.103.
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    Sections 1176 and 1177 of the Act establish civil money penalties 
(CMPs) and criminal penalties to which covered entities may be subject 
for violations of HIPAA Administrative Simplification rules. HHS 
administers the CMPs under section 1176 of the Act and the U.S. 
Department of Justice administers the criminal penalties under section 
1177 of the Act. Section 1176(b) of the Act sets out limitations on the 
Secretary's authority and provides the Secretary certain discretion 
with respect to imposing CMPs. For example, this section provides that 
no CMPs may be imposed with respect to an act if a penalty has been 
imposed under section 1177 of the Act with respect to such act. This 
section also generally precludes the Secretary from imposing a CMP for 
a violation corrected during the 30-day period beginning when an 
individual knew or, by exercising reasonable diligence, would have 
known that the failure to comply occurred.
    The original HIPAA provisions are discussed in greater detail in 
the August 17, 2000 final rule titled ``Health

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Insurance Reform: Standards for Electronic Transactions'' final rule 
(65 FR 50312, hereinafter referred to as the Transactions and Code Sets 
final rule), and the December 28, 2000, final rule titled ``Standards 
for Privacy of Individually Identifiable Health Information'' (65 FR 
82462). We refer the reader to those documents for further information.
2. Amendments to HIPAA Administrative Simplification by the Affordable 
Care Act
    Section 1104(c)(3) of the Affordable Care Act reiterated the 
original HIPAA requirement to adopt a health claims attachment 
standard, and directed the Secretary to promulgate a final rule to 
establish a transaction standard and a single set of associated 
operating rules. Section 1104(c)(3) of the Affordable Care Act requires 
that the adopted standard be ``consistent with the X12 Version 5010 
transaction standards'' and indicates that the Secretary must adopt the 
standard and operating rules by January 1, 2014, to be effective no 
later than January 1, 2016, and that the Secretary may adopt the 
standard and operating rules on an interim final basis. This provision 
makes no allowance for an extended time for small health plans to 
achieve compliance.

B. Prior Rulemaking

    In the Transactions and Code Sets final rule, we implemented some 
of the HIPAA Administrative Simplification requirements by adopting 
standards for electronic health care transactions developed by SSOs, 
and medical code sets to be used in those transactions. We adopted X12 
Version 4010 standards for administrative transactions, and the 
National Council for Prescription Drug Programs (NCPDP) 
Telecommunication Version 5.1 standard for retail pharmacy 
transactions, which were specified at 45 CFR part 162, subparts K 
through R.
    Since then, we have adopted a number of modifications to the HIPAA 
standards, most recently in a January 16, 2009 final rule (74 FR 3296) 
titled ``Health Insurance Reform; Modifications to the Health Insurance 
Portability and Accountability Act (HIPAA) Electronic Transaction 
Standards'' (hereinafter referred to as the Modifications final rule). 
That rule, among other things, adopted updated versions of the 
standards, X12 Version 5010, and the NCPDP Telecommunication Standard 
Implementation Guide Version D.0 and equivalent Batch Standard 
Implementation Guide, Version 1, Release 2. We also adopted the NCPDP 
Implementation Guide for Batch Standard Version 3.0 standard for the 
Medicaid pharmacy subrogation transaction. Covered entities were 
required to comply with the Version 5010, Version D.0, and Version 3.0 
standards on January 1, 2012, though with respect to the latter, small 
health plans were required to comply on January 1, 2013.
    In the September 23, 2005 Federal Register (70 FR 55990), in a rule 
titled ``HIPAA Administrative Simplification: Standards for Electronic 
Health Care Claims Attachments; Proposed Rule,'' we proposed to adopt 
certain standards with respect to health care attachments. In that 
rule, rather than a standard with generalized applicability, we 
proposed to adopt health care claims attachment standards with respect 
to specific service areas that included ambulance services, clinical 
reports, emergency department, laboratory results, medications, and 
rehabilitation services. Due, however, to comments we received on our 
proposals, including comments related to the standards' lack of 
technical maturity and stakeholders' lack of readiness to implement 
electronic capture of clinical data, we did not finalize that rule. As 
a result, and despite the subsequent widespread deployment of 
electronic health records (EHRs) and greater industry experience with 
the HIPAA standards, transmitting health care attachments is still 
primarily a manual process and, at this time there are no adopted HIPAA 
standards, implementation guides, or operating rules for health care 
attachments or electronic signatures. Other specific details of prior 
rulemaking are discussed as appropriate in the context of the proposals 
in section II. of this proposed rule.

C. Standards and Code Sets Organizations

    In this section, we discuss information about the organizations 
responsible for developing and maintaining the transaction standards 
and code sets that we are either proposing or discussing in this 
proposed rule. Information about each organization's balloting 
process--the process by which they vet and approve the products they 
develop and changes thereto--is available on their respective websites, 
links to which are provided in this section of this rule.
    As we have discussed, the law requires any standard adopted under 
HIPAA to be developed, adopted, or modified by an SSO. Section 1171 of 
the Act provides that an SSO is an organization accredited by the 
American National Standards Institute (ANSI) that develops standards 
for information transactions, data elements, or any standard that is 
necessary to, or will facilitate the implementation of, Administrative 
Simplification. Per section 1172(c)(3) of the Act, a HIPAA SSO must 
develop, adopt, and modify standards in consultation with certain 
organizations--the National Uniform Billing Committee (NUBC), the 
National Uniform Claim Committee (NUCC), the Workgroup for Electronic 
Data Interchange (WEDI), and the American Dental Association (ADA). The 
two SSOs applicable to this proposed rule are the Accredited Standards 
Committee X12 (X12) and Health Level Seven International (HL7). Both 
SSOs maintain websites where the proposed implementation specifications 
may be obtained. One other organization, which is a health research 
institution and not an SSO, maintains a code set that is important to 
this rulemaking--the Regenstrief Institute, maintains a code set named 
Logical Observation Identifiers Names and Codes (LOINC).
1. X12 (http://www.x12.org/)
    X12 develops and maintains standards for the electronic exchange of 
business-to-business transactions. An ANSI-accredited organization, X12 
membership is open to all individuals and organizations. An X12 
subcommittee known as Subcommittee N: Insurance (X12N) develops and 
maintains electronic standards specific to the insurance industry, 
including health care insurance. The subcommittee, which is comprised 
of volunteers, develops standards for electronic health care 
transactions for common administrative activities including: claims, 
remittance advice, claims status, enrollment, eligibility, 
authorizations and referrals, and electronic health care claims 
attachments. The X12N subcommittee is responsible for obtaining 
consensus on the standards from the entire organization, and produces 
draft documents that are made available for public review and comment, 
which the subcommittee addresses as necessary before voting on any 
proposal. Proposals must then be reviewed and ratified by a majority of 
the voting members of the X12N subcommittee and the executive committee 
of X12 itself.
2. Health Level Seven (HL7) (www.HL7.org)
    HL7 is an ANSI-accredited SSO that develops and maintains standards 
for the exchange, integration, sharing, and retrieval of electronic 
health information that supports clinical practice and the management, 
delivery and evaluation of health services. Its

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domain is principally clinical data and its specific emphasis is on the 
interoperability between health care information systems. HL7, whose 
membership is open to all individuals and organizations, focuses its 
interface requirements on the entire health care organization rather 
than on a particular subset of the health care industry.
    HL7 conducts a three-step process to establish standards. First, a 
technical committee develops standards through a voting process. All 
HL7 members are eligible to vote on standards, regardless of whether 
they are members of the committee that developed the standard. Non-
members may also vote on a given ballot for a standard, though they 
must pay an administrative fee (that does not exceed the cost 
associated with an individual HL7 membership) associated with handling 
and processing. Second, HL7 technical committees vote on 
``recommendations,'' which require a two-thirds majority for approval. 
Third, any recommended standards are submitted to the entire HL7 body 
for approval and, if approved, are submitted to ANSI for certification.
3. Regenstrief Institute (LOINC.org)
    Regenstrief Institute (Regenstrief) is a health research 
institution that develops and maintains a proprietary code set, Logical 
Observation Identifiers Names and Codes (LOINC). LOINC is the code 
system, terminology, and vocabulary for identifying individual clinical 
results and other clinical information. Regenstrief worked closely with 
the HL7 Payer/Provider Information Exchange Workgroup, formerly known 
as the Attachments Work Group, to develop a set of LOINC codes to 
uniquely indicate the type and content of attachment information in 
electronic transmissions. Regenstrief maintains LOINC through its LOINC 
Committee, which is comprised of volunteer representatives from 
academia, industry, and government who serve as subject matter experts 
in their domains of expertise. That committee establishes overall 
naming conventions and policies for the development process.

D. Industry Standards, Code Sets, and Implementation Guides

1. Electronic Data Interchange (EDI) and Transaction Standards
    HIPAA transactions involve the electronic transmission of 
information between two parties to carry out health care-related 
financial or administrative activities, such as health insurance claims 
submissions and prior authorization requests, and HHS-adopted standards 
for those transactions represent uniform requirements for EDI of those 
transmissions.
    The benefit of HIPAA standards is that they use a common 
interchange structure, eliminating covered entities' need to have 
information technology (IT) systems that accommodate multiple 
proprietary, and potentially continually changing, data formats. By 
enabling covered entities to exchange medical, billing, and other 
information to process transactions in a more expedient and cost-
effective manner by reducing handling and processing time and 
eliminating the risk of lost paper documents, HIPAA standards can 
reduce administrative burdens, lower operating costs, and improve 
overall data quality.
    HIPAA transaction standards specify: (1) data interchange 
structures (message transmission formats); and (2) data content (all 
the data elements and code sets inherent to a transaction, and not 
related to the format of the transaction). Implementation 
specifications detail the nature, location, and content format of each 
piece of information transmitted in a transaction. Standardization of 
transactions also involves: specification of the data elements that are 
exchanged; uniform definitions of those specific data elements in each 
type of electronic transaction; identification of the specific codes or 
values that are valid for each data element; and specification of the 
business actions each party must take to ensure the exchange of 
administrative transactions occurs smoothly and reliably, regardless of 
the technology employed.
a. Implementation Guides--X12
    As discussed previously, X12 develops and maintains standards for 
the electronic exchange of business-to-business transactions. The X12N 
subcommittee (X12N) publishes transmission standards that apply to many 
lines of business, not just health care. For example, the X12N 820 
message format for premium payment may be used for automobile and 
casualty insurance, not just health insurance. X12 implementation 
specifications, referred to by the industry as ``implementation 
guides'' and written collaboratively by X12N workgroups, make these 
general standards functional for industry-specific uses. The 
specifications are based on X12 standards but contain detailed 
instructions for using the standard to meet a specific business need. 
X12's implementation specifications for HIPAA transaction standards 
adopted by the Secretary are known as ``Technical Reports Type 3'' 
(TR3); an example is the X12 standard adopted as the HIPAA standard for 
the health plan premium payments transaction, the ASC X12 Standards for 
Electronic Data Interchange Technical Report Type 3--Payroll Deducted 
and Other Group Premium Payment for Insurance Products (820), February 
2007, ASC X12N/005010X218).
    Each X12N implementation guide has a unique version identification 
number (for example, 004010, 004050, or 005010), where the highest 
version number represents the most recent version. HHS adopted updated 
versions of the X12 standards in the Modifications final rule (74 FR 
3296). We are proposing to adopt a Version 6020 standard for one of the 
HIPAA transactions, the rationale for which we discuss in section II. 
of this proposed rule.
b. Implementation Guides--HL7
    HL7's Payer/Provider Information Exchange Workgroup develops 
standards for electronic health care attachments. The workgroup, which 
includes industry experts representing health care providers, health 
plans, and health technology vendors, is also responsible for creating 
and maintaining the implementation guides, which are sets of 
instructions and associated code tables that describe, list, or itemize 
the content, format, and code to be sent, and specify how such 
information is to be conveyed in an electronic health care attachment.
    An HL7 standard that we are proposing to adopt in this proposed 
rule is the Clinical Document Architecture (CDA), which is an XML-based 
(a computer programming language) markup standard that specifies the 
encoding, structure, and semantics of clinical documents for purposes 
of transmitting attachment information. XML-coded files have the same 
characteristics and information as hard copy documents, so regardless 
of how data are sent within a transaction, they can be read and 
processed by both people and machines. Some health care attachments may 
not be conducive to XML formatting, such as medical imaging, video, or 
audio files. An important CDA feature is that it allows the entire body 
of an electronic document to be replaced by an image, for example, a 
scanned copy of a page or pages from a medical record. Although a 
header still supports automated document management, the clinical 
content can be conveyed by image or text document.
    HL7 also produces the Consolidated CDA (C-CDA), an implementation 
guide that provides specifications for formatting document templates,

[[Page 78442]]

depending on whether they are structured or unstructured, enabling the 
CDA to create numerous specific document types (templates). The HL7 C-
CDA implementation guide document templates are designed to be 
electronic versions of the most common types of paper document 
attachment information. Attachment information not included in a 
template may be created by using instructions included in the proposed 
unstructured document implementation guide; supported unstructured 
formats include MSWORD, PDF, Plain Text, RTF Text, HTML Text, GIF 
Image, TIF Image, JPEG Image, and PNG Image.
2. Code Sets
    Transaction data content standardization involves identifying the 
specific codes or values for each data element. Health care EDI 
requires many types of code sets, including large medical data code 
sets and classification systems for medical diagnoses, procedures, and 
drugs, and smaller code sets to identify categories, such as type of 
facility, currency, or units, or a specific state within the United 
States. The American Medical Association's (AMA) Current Procedural 
Terminology (CPT-4), which identifies physician procedures, is an 
example of a health care code set. Federal agencies (the National 
Center for Health Statistics, the Centers for Medicare & Medicaid 
Services (CMS), and the U.S. Food and Drug Administration) and some 
private organizations (the AMA and the American Dental Association) 
have developed and maintain standards for large medical data code sets. 
These code sets are mandated for use in some federal and state 
programs, such as Medicare and Medicaid, and SSOs require or permit 
them for use in their standards. As we explain in section II. of this 
proposed rule, the X12 and HL7 standards we are proposing to adopt 
specify the use of the LOINC for HIPAA Attachments code set.
3. Implementation Guides as HIPAA Standards
    Section 1172(d) of the Act directs the Secretary to establish 
specifications for implementing each of the adopted standards. As we 
explained previously, SSOs have developed various ``Implementation 
Guides'' by which to implement the same standards for different 
business purposes. We are proposing an approach we have taken with 
previous HIPAA rules that adopted a specific ``Implementation Guide'' 
as both the ``standard'' and the ``implementation specifications'' for 
each health care transaction.
    In pursuing this approach, we were mindful that section 1104(c)(3) 
of the Affordable Care Act requires that the Secretary promulgate a 
final rule to establish a transaction standard and a single set of 
operating rules for health care attachments that is ``consistent with 
the X12 Version 5010 transaction standards.'' We interpret this 
requirement to mean that the proposed health care attachment 
implementation specifications must be compatible with X12 standards 
generally, meaning any standard we adopt for attachment information can 
be electronically transmitted by an X12 transmission standard in the 
same transaction. In this rule, we are proposing to adopt Version 6020 
of the X12 standards. The Affordable Care Act was enacted in 2010, at 
which time we had recently adopted Version 5010 of the X12 standards. A 
decade later, and with X12 continuing to publish newer versions of its 
standards, we interpret the Affordable Care Act's mandate as 
referencing the then-current standards (the X12 Version 5010), but the 
Affordable Care Act did not specifically require a static standard in 
perpetuity, as that would be incongruent with the HIPAA standards 
paradigm.
    In section II. of this proposed rule, we are proposing to adopt 
transaction standards that can be used together in a single electronic 
transmission. HL7 has noted that an extensive architecture already 
exists for information exchange based on the HIPAA transactions and 
code sets, which architecture is currently being used by the same 
stakeholders who would use the health care attachments transactions, so 
adoption of this architecture using X12 standards could have the least 
impact on covered entities.\2\
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    \2\ Transcript of NCVHS Subcommittee on Standards Hearing on 
Electronic Attachments Standards and Operating Rules, February 27, 
2013: https://ncvhs.hhs.gov/transcripts-minutes/transcript-of-the-february-27-2013-ncvhs-subcommittee-on-standards-hearing/.
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    Independent of that concept, we are also aware that there are other 
types of standards being developed and piloted by SSOs. We solicit 
comment on this discussion and any alternative implementation 
specifications that may be considered consistent with X12 Version 5010.

E. NCVHS Recommendations to the Secretary

    The NCVHS (https://ncvhs.hhs.gov/) is a statutory advisory 
committee responsible for providing HHS with recommendations on health 
information policy and standards. It does so by, among other things, 
convening regular forums for interaction with industry groups on key 
issues related to population health, standards, privacy and 
confidentiality, and data access and use. Pursuant to HIPAA, the NCVHS 
advises HHS on the adoption of standards, implementation 
specifications, code sets, identifiers, and operating rules for HIPAA 
transactions.
    The NCVHS has held a number of hearings, and made several sets of 
recommendations to the Secretary (see https://ncvhs.hhs.gov/reports/recommendation-letters/) on claims attachments standards; we briefly 
summarize them here. The NCVHS Standards Subcommittee held a November 
17, 2011 hearing on health claims attachments to gather information 
regarding updated industry practices, priorities, issues, and 
challenges. Participant testimony addressed the development status of 
standards and implementation specifications. Some organizations 
testified regarding their interest in serving as attachments operating 
rules authoring entities. By letter to HHS dated March 2, 2012, the 
Subcommittee told HHS it was premature to make formal recommendations 
regarding the adoption of any standard, implementation specification, 
or operating rule associated with health care attachments. On May 5, 
2012, the NCVHS recommended that the Council for Affordable Quality 
Healthcare Committee (CAQH), a non-profit entity whose mission is to 
improve the efficiency, accuracy and effectiveness of industry-driven 
business transactions, be designated as the operating rules authoring 
entity.
    CAQH established the Committee on Operating Rules for Information 
Exchange (CAQH CORE), an industry-wide collaboration committed to the 
development and adoption of health care operating rules for 
administrative transactions. CAQH CORE facilitates the adoption of 
health care operating rules that support standards, improve 
interoperability, and align administrative and clinical activities with 
market needs.
    The Subcommittee held a second hearing on attachments on February 
27, 2013, where it identified a trend toward convergence of 
administrative and clinical information. In a June 21, 2013 letter, the 
NCVHS recommended that, by January 1, 2016 (the date by which the 
Affordable Care Act required claims attachment standards to be 
effective), HHS adopt a number of initial attachments-related 
transaction standards, but advised HHS to take a comprehensive and 
incremental approach to considering attachment

[[Page 78443]]

standards in order to promote innovation and flexibility. The NCVHS 
noted an industry consensus that adoption of standards should not be 
limited to ``claim attachments,'' but, rather, should be more inclusive 
of any kind of attachment with administrative or clinical information, 
and it recommended that attachments-related transaction standards 
should be applied to claims, eligibility, prior authorization, 
referrals, care management, post-payment audits, and any other 
administrative processes for which supplemental information is needed. 
Among other recommendations, the NCVHS advised HHS that attachment 
standards should support structured and unstructured data, and both 
solicited and unsolicited transmissions. It further advised that 
attachments standards should be defined for two types of transactions: 
(1) Query (the electronic solicitation of an attachment); and (2) 
Response (the electronic transmission of an attachment).
    The NCVHS held another hearing on health care attachments on 
February 15, 2016, and on July 5, 2016 sent the Secretary a letter 
titled ``Recommendations for the Electronic Health Care Attachment 
Standard.'' This letter consolidated its previous recommendations on 
attachments and advised that updated versions of the available 
standards were ready for industry use and there was unanimous testimony 
that the health care industry was eager to see them adopted. 
Considering both the length of time that had elapsed since the previous 
proposed rule was published and the subsequent technology advances, the 
NCVHS recommended that HHS publish an expedited proposed rule adopting 
the recommended standards.
    Finally, and most recently, on March 30, 2022, the NCVHS sent to 
the Secretary a letter titled ``Recommendations to Modernize Aspects of 
HIPAA and Other HIT Standards to Improve Patient Care and Achieve 
Burden Reduction.'' This letter continued to stress previous 
recommendations that urged the Secretary to adopt a standard for 
electronic attachments as soon as possible. The recommendation letter 
also states the following:

    We recognize that there is ongoing debate and no definitive 
industry consensus about the role of attachments (i.e., documents) 
as opposed to data (i.e., a string of data elements not structured 
within a document). While the vision with APIs [(Application 
Programming Interfaces)] based on FHIR[supreg] [(Fast Healthcare 
Interoperability Resources)] seems to be driving toward more of a 
data-driven transaction, we see more than sufficient industry demand 
for a document-based attachment standard, and we do not foresee any 
imminent demise of the utility of digital documents. We suggest 
short-term publication of an attachment rule, with consideration for 
emerging standards based on recent input from industry and other 
advisory group discussions. This could add immediate value for 
industry and could support future actions as HIPAA's procedural 
requirements may be updated to allow for non-document type digital 
attachment data.\3\
---------------------------------------------------------------------------

    \3\ ``Recommendations to Modernize Aspects of HIPAA and Other 
HIT Standards to Improve Patient Care and Achieve Burden 
Reduction,'' available at https://ncvhs.hhs.gov/wp-content/uploads/2022/04/Recommendation-Letter-HIT-Standards-Modernization-to-Improve-Patient-Care-March-30-2022.pdf (March 2022)

    Based on the NCVHS's previous recommendations to the Secretary, and 
particularly in consideration of its most recent March 30, 2022 
recommendation, we propose here a document-based attachments standard. 
We acknowledge that there is a growing base of evidence that may, in 
the future, support our proposing attachment standards relying on other 
technologies such as FHIR[supreg], and we will continue to monitor and 
evaluate emerging technologies for their readiness to potentially 
propose in future rulemaking.

F. Other Industry Recommendations

1. Consensus-Based Organization Support
    Industry consensus-based organizations have demonstrated the 
maturity of the NCVHS-recommended standards to support health care 
business needs and described the opportunities inherent in the adoption 
of health care attachments standards to integrate administrative and 
clinical data, such as in automating and streamlining workflows that, 
today, are primarily manual processes and sources of significant 
administrative burden.
    WEDI (https://www.wedi.org/) is a public-private coalition formed 
by HHS in 1991 to serve as an advisory body on the use of health IT 
aimed at health care information exchange. WEDI, which section 
1172(c)(3) of the Act identifies as an entity required to be consulted 
with respect to standards adoption, published a November 2017 white 
paper, in concert with X12 and HL7.\4\ That white paper, described by 
WEDI as ``a single resource document for implementers to use to help 
them get started in their implementation planning for the request and 
receipt of electronic attachments,'' details the business and 
operational processes of exchanging additional information 
(attachments) using the HL7 standards for clinical information and the 
X12 transaction sets for requesting and transmitting the additional 
information. Its contents, which we have taken into account in this 
proposed rule, include all of the following:
---------------------------------------------------------------------------

    \4\ ``Guidance on Implementation of Standard Electronic 
Attachments for Healthcare Transactions,'' available at https://www.wedi.org/2017/11/17/guidance-on-implementation-of-standard-electronic-attachments-for-healthcare-transactions/ (November 2017).
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     An overview of attachments.
     A discussion of resources needed to have a successful 
implementation of attachments standards.
     A review of current processes for requesting and 
responding to the need for attachment information.
     Examples of implementation approaches in the industry.
     A review of Electronic Attachment Business flows for 
Claims, Prior Authorizations and Notification.
     Business use cases and examples.
     Guidance on how to embed additional information within the 
applicable X12N transaction.
    In May 2019, CAQH CORE issued a document titled ``Report on 
Attachments: A Bridge to a Fully Automated Future to Share Medical 
Documentation,'' \5\ where it reported evidence from its 2018 
environmental scan indicating a high degree of industry readiness and 
interest in the attachments standard. The report noted that ``the 
healthcare industry continues to wait for an electronic attachments 
standard that can simplify the exchange of necessary medical 
information and supplemental documentation'' and that ``health plans, 
providers and vendors lack the direction needed to support broad use of 
automation in the attachment workflow, or for industry to coalesce 
around the use of even a small number of electronic solutions,'' 
leading to largely manual, and often paper-based, processes, and 
ultimately underscoring the need to standardize electronic attachment 
exchange methods.
---------------------------------------------------------------------------

    \5\ ``CAQH CORE Report on Attachments: A Bridge to a Fully 
Automated Future to Share Medical Documentation,'' available at 
https://www.caqh.org/sites/default/files/core/core-attachments-environmental-scan-report.pdf (April 23, 2021).
---------------------------------------------------------------------------

    Shortly after, in July 2019, CAQH CORE released another report 
titled ``Moving Forward: Building Momentum for End-to-End Automation of 
the Prior Authorization Process.'' \6\ There, CAQH CORE reported how, 
for even the HHS-adopted prior authorization transaction standards, 
health care industry uptake

[[Page 78444]]

lagged that of other transaction standards, and remained largely paper-
based, due in large measure to a lack of infrastructure supporting 
electronic transmission of attachments that frequently serve as 
necessary supporting documentation in the prior authorization 
transaction.
---------------------------------------------------------------------------

    \6\ ``Moving Forward: Building Momentum for End-to-End 
Automation of the Prior Authorization Process,'' available at 
https://www.caqh.org/sites/default/files/core/white-paper/CAQH-CORE-Automating-Prior-Authorization.pdf (April 23, 2021).
---------------------------------------------------------------------------

2. Other Recent Public Comment Support
    On June 11, 2019, CMS published a request for information (RFI) in 
the Federal Register titled ``Reducing Administrative Burden To Put 
Patients Over Paperwork'' (84 FR 27070). Particularly with respect to 
prior authorization, that RFI solicited public comment on ideas for 
regulatory, subregulatory, policy, practice, and procedural changes to 
reduce unnecessary administrative burdens for clinicians, providers, 
patients, and their families, with an aim to improve quality of care, 
lower costs, improve program integrity, and make the health care system 
more effective, simple, and accessible. To be clear, the RFI did not 
relate to, and was not for the purpose of, soliciting comments on HHS's 
efforts pertaining to HIPAA Administrative Simplification, but, 
nevertheless, many commenters, including organizations representing 
physician provider groups, insurance payers, health technology vendors, 
health care financial managers, and HIT standard advisory bodies, 
called for the release of an electronic attachments proposed rule to be 
accelerated, as well as guidance on other standards such as electronic 
signature protocols to achieve these goals. These commenters indicated 
that a HIPAA attachments transaction standard regulation could help 
reduce administrative burden in many clinical and administrative 
situations where documents need to be shared, and relieve providers of 
current burdensome, largely paper-based, processes.
    In preparation for its August 25, 2020 Standards Committee Meeting, 
the NCVHS invited the public to provide feedback on the CAQH CORE 
operating rules for prior authorization transactions.\7\ Commenters 
expressed their support for an attachments transaction standard 
regulation. In addition, commenters provided input on current standards 
development efforts underway to address prior authorization challenges, 
including recommendations for the Secretary to explore or allow the use 
of other standards or alternative approaches.
---------------------------------------------------------------------------

    \7\ https://ncvhs.hhs.gov/wp-content/uploads/2020/10/Public-Comments-CAQH-CORE-Operating-Rules-for-Federal-Adoption-August-2020r.pdf
---------------------------------------------------------------------------

    We solicit comments on other standards or alternative approaches in 
development, for example the use of FHIR Clinical Data Exchange (CDex) 
as discussed in an NCVHS recommendation letter,\8\ including how they 
may be considered ``consistent with the X12 Version 5010 transaction 
standards.''
---------------------------------------------------------------------------

    \8\ https://ncvhs.hhs.gov/wp-content/uploads/2022/04/Recommendation-Letter-HIT-Standards-Modernization-to-Improve-Patient-Care-March-30-2022.pdf.
---------------------------------------------------------------------------

III. Provisions of the Proposed Rule

A. Overview

    This rule proposes to adopt new standards and modify a currently 
adopted standard which we believe would meet a health care business 
need to integrate administrative and clinical data. These proposed 
actions would facilitate streamlined prior authorization processes that 
would help minimize clinical response times, reduce potential barriers 
to the transition to value-based payments, and significantly reduce 
administrative burden on provider and health plan organizations.\9\ 
Consistent with NCVHS recommendations and collaborative industry 
organizations and stakeholders' input, we believe these industry 
consensus-based standards are sufficiently mature for adoption and that 
covered entities are ready to implement them.
---------------------------------------------------------------------------

    \9\ CAQH CORE Report on Attachments: ``A Bridge to a Fully 
Automated Future to Share Medical Documentation'', CAQH CORE, May 9, 
2019: https://www.caqh.org/about/press-release/caqh-core-study-reveals-five-opportunities-increase-electronic-exchange-medical.
---------------------------------------------------------------------------

    Nearly every health plan has various requirements for health care 
providers to sometimes submit additional information beyond that 
contained in a HIPAA transaction. These requirements may be 
communicated to providers via contracts, manuals, or online databases 
of payment rules. This additional information may enable a health plan 
to make an administrative decision regarding whether a particular 
service is ''covered,'' or about the medical necessity of a service a 
provider has rendered or intends to render, or for other purposes. The 
information a health plan requires may, for example, include medical 
documentation to support health care claims payment, referral 
authorizations, enrollee eligibility inquiries, coordination of 
benefits, workers' compensation claims, post-payment claims auditing, 
and provider dispute resolution.\10\
---------------------------------------------------------------------------

    \10\ Letter from NCVHS to the Secretary of HHS, March 2, 2012: 
https://ncvhs.hhs.gov/wp-content/uploads/2014/05/120302lt1.pdf.
---------------------------------------------------------------------------

    A health care provider may transmit attachment information either 
in response to a health plan's specific request for the information 
(solicited), or, in certain situations, in the absence of a specific 
request (unsolicited). A ``solicited'' attachment transmission occurs 
where a health care provider transmits an attachment pursuant to a 
health plan's specific electronic request for attachment information. 
Conversely, a health care provider's transmitting to a health plan 
electronic attachment in the absence of a health plan's specific 
electronic request is known as an ``unsolicited'' transmission, and 
usually occurs pursuant to pre-established requirements for attachment 
information set forth in trading partner agreements or other guidance 
that specifies when additional information must be submitted to support 
certain diagnoses, items, services, or medications.
    Although providers may transmit this additional information 
electronically via an attachment to a transaction, currently providers 
frequently transmit via manual processes that often involve paper mail, 
fax, and phone because there are no adopted HIPAA standards for health 
care attachments.
    We are proposing standards herein to address these issues; in doing 
so, we need to define the term ``attachment information.''

B. Proposed Definition of Attachment Information

    We propose to define ``attachment information'' at Sec.  162.103 as 
documentation that enables the health plan to make a decision about 
health care that is not included in either of the following:
     A health care claims or equivalent encounter information 
transaction, as described in Sec.  162.1101.
     A referral certification and authorization transaction, as 
described in Sec.  162.1301(a) and the portion of Sec.  162.1301(c) 
that pertains to authorization.
    We use the term ``attachment information'' in our proposed 
definition of the health care attachments transaction at Sec.  162.2001 
to specify the information transmitted by a health care provider or 
requested by a health plan. We are proposing to separately define 
``attachment information'' to prevent the transaction definition at 
Sec.  162.2001 from becoming too unwieldy.

[[Page 78445]]

    The NCVHS recommended defining attachments as ``any supplemental 
documentation needed about a patient(s) to support a specific health 
care-related event (such as a claim, prior authorization, or referral) 
using a standardized format,'' and we have incorporated key aspects of 
their recommendation into our proposed definition of attachment 
information.\11\ We have attempted to ensure that our proposed 
definition is broad and general enough to include all possible patient-
related information that could be generated with respect to health care 
services, and have done this in several ways.
---------------------------------------------------------------------------

    \11\ NCVHS Letter to the Secretary of HHS on Recommendations for 
the Electronic Health Care Attachment Standard, July 5, 2016: 
https://ncvhs.hhs.gov/wp-content/uploads/2018/03/2016-Ltr-Attachments-July-1-Final-Chair-CLEAN-for-Submission-Publication.pdf.
---------------------------------------------------------------------------

    Documentation: First, we believe the word ``documentation,'' which 
the NCVHS recommended and that we include in our proposed definition, 
is adequately broad to indicate the wide scope of information the 
definition should cover.
    Supplemental: Second, the NCVHS recommended the definition specify 
that the documentation be ``supplemental.'' In and of themselves, the 
health care claims and prior authorizations transactions, which the 
proposed health care attachments transactions would support, do not 
provide the documentation that would be furnished by a health care 
attachments transaction. To express that the documentation would be 
supplemental, our proposed definition indicates that we are referring 
to documentation ``that is not included'' in a health care claims 
transaction or prior authorization transaction, and we include specific 
references to the regulatory provisions defining the health care claims 
and prior authorization transactions. Should we propose to adopt health 
care attachments transaction standards to support additional 
transactions, we would likely propose to broaden our definition of 
attachment information to include regulatory references to them.
    Needed: Third, the NCVHS recommended that the definition specify 
the supplemental documentation should be ``needed'' by a health plan to 
enable it to decide whether to pay a claim or authorize the provision 
of health care; our proposed definition accounts for this with the 
language ``enables the health plan to make a decision about health 
care.''

C. Proposed Code Set, Transaction Definitions, and Standards

    We are proposing to adopt certain industry consensus standards 
that, when used together, provide the functionality necessary for the 
transmission of electronic health care attachment information.\12\ In 
this section, we describe proposed new requirements for: (1) a code set 
to be used for health care attachments transactions; (2) X12 standards 
for requesting and transmitting attachment information and HL7 
standards for clinical information content; and (3) electronic 
signatures standards.
---------------------------------------------------------------------------

    \12\ For additional information about the business and 
operational processes involved in the exchange of these standards, 
we refer readers to the aforementioned November 2017 WEDI whitepaper 
and the HL7 CDA[supreg] R2 Attachment Implementation Guide: Exchange 
of C-CDA Based Documents, Release 1 Release 1 (Universal Realm) for 
more technical information. Both are available at: http://www.hl7.org/implement/standards/product_brief.cfm?product_id=464.
---------------------------------------------------------------------------

1. Code Set (LOINC for HIPAA Attachments)
    Health plans and health care providers must have a clear and 
unambiguous way to specify attachment information--for example, a 
discharge summary, surgical operation note, or cardiovascular disease 
consult note--to be transmitted or requested in a health care 
attachments transaction.
    The LOINC code set was developed for the following three principal 
purposes:
     To identify the specific kind of information that a health 
plan electronically requests of a health care provider and a health 
care provider electronically transmits to a health plan; for example, a 
discharge summary or a diagnostic imaging report.
     To specify certain optional modifier variables for 
attachment information, such as, for example, a time period for which 
the attachment information is requested.
     For structured attachment information, to identify 
specific HL7 Implementation Guide: LOINC Document Ontology document 
templates.
    This rule proposes numerous implementation specifications 
containing specific instructions for how to utilize the LOINC for HIPAA 
Attachments with respect to those three purposes. Where an 
implementation specification requires the use of LOINC, it instructs 
users to utilize the codes valid at the time a transaction is 
initiated, similar to how other nonmedical data codes sets in HIPAA 
implementation specifications are treated. Regenstrief's website 
maintains online tools to help users search the LOINC database for 
specific LOINC codes or map local terms to LOINC codes (https://loinc.org/attachments). To improve ease of use, Regenstrief released 
and enhanced the search functionality to the SearchLoinc tool (https://loinc.org/search-app/). In addition, Regenstrief offers the LOINC 
Attachments Knowledge Base (https://loinc.org/attachments) to help 
users better find and utilize LOINC codes and resources such as 
mapping. Regenstrief maintains a twice-yearly release cycle, and 
covered entities would be expected to utilize the LOINC for Attachments 
codes, as specified by the relevant implementation specification. In 
our discussion of each implementation specification, we describe in 
more detail how each uses LOINC.
2. Electronic Health Care Attachments Transactions
    In this section, we propose to adopt standards for requesting and 
transmitting attachment information (as we have proposed to define that 
term in Sec.  162.103). We are proposing to adopt X12 standards with 
respect to the transmission of attachment information and HL7 standards 
with respect to the clinical content of attachments. Specifically, as 
detailed in the sections that follow, we are proposing to adopt three 
X12N Technical Report Type 3 (TR3) implementation specifications for 
requesting and transmitting attachment information, and three HL7 
implementation guides for the clinical information embedded in those 
transactions. While CAQH CORE has developed operating rules for 
attachments, the NCVHS has yet to evaluate them and make a 
recommendation to the Secretary. Should the NCVHS recommend that the 
Secretary adopt those operating rules, we will consider adopting them.
a. Scope of Health Care Attachments Transactions
    Section 1173(a) of the Act requires the Secretary to adopt 
standards for ``Health claims attachments,'' and section 1104(c)(3) of 
the Affordable Care Act reiterated that requirement, directing the 
Secretary to promulgate a final rule to adopt a transaction standard 
and a single set of associated operating rules. The attachments 
standards we are proposing satisfy the requirement to adopt a standard 
to support health care claims, but they also support prior 
authorization transactions. Hereafter we refer to ``health care 
attachments'' to refer to attachments for claims as well as prior 
authorization transactions

[[Page 78446]]

instead of ``health claims attachments,'' which only includes the 
former.
    Historically, the referral certification and authorization 
transaction has had among the lowest implementation rates of all the 
HIPAA transactions, likely attributable to the fact that we have not 
yet adopted standards for attachments. In a 2016 report, the CAQH CORE 
Index \13\ noted that the uptake rate for such transactions being 
conducted fully electronically was only 18 percent, even 5 years after 
the adoption of Version 5010 of the X12 278 standard. The report also 
indicated that more than 50 percent of prior authorization transactions 
were conducted through proprietary web portals and automated phone 
calls as a means to conform to business processes due to the lack of an 
adopted health care attachments standard. Four years later, the 2020 
CAQH Index reported only limited progress, with the uptake rate having 
increased to only 21 percent. As we have discussed, health plans 
frequently require attachment information before approving requests for 
prior authorization for health care services. Although section 
1173(a)(1)(A) of the Act does not specifically require the Secretary to 
adopt attachments standards with respect to prior authorization 
transactions, section 1173(a)(1)(B) of the Act requires the Secretary 
to adopt standards for other appropriate financial and administrative 
transactions, consistent with the goals of improving the operation of 
the health care system and reducing administrative costs.
---------------------------------------------------------------------------

    \13\ CAQH CORE ``2016 CAQH INDEX[supreg] A Report of Healthcare 
Industry Adoption of Electronic Business Transactions and Cost 
Savings'' https://www.caqh.org/sites/default/files/explorations/index/2016-caqh-index-report.pdf?token=qV_hI4H5.
---------------------------------------------------------------------------

    However, we are not proposing to adopt attachments standards for 
all health care transaction business needs. Not only would it be 
challenging to identify standard specifications and appropriate codes 
for the full array of different health care attachment types used 
today, but we also believe it is important that covered entities should 
consider gaining experience with a limited number of standard 
electronic attachment types so that technical and business issues can 
be identified to inform potential future rulemaking for other 
electronic attachments standards.
    We request comment on alternative standards and approaches that can 
address the challenges described previously.
b. Proposed Definition of the Health Care Attachments Transaction
    We are proposing to add a new Subpart T to 45 CFR part 162--Health 
Care Attachments. In Subpart T, in new Sec.  162.2001, we are proposing 
to specify the electronic health care attachments transaction; 
specifically, we are proposing that any of three different types of 
transmissions would constitute a health care attachments transaction. 
For each type of transmission, we specify the entity type from which 
the transaction is being transmitted and to which it is being sent, the 
type of information being transmitted, and the purpose for the 
transaction. We note that the overarching purpose for all three types 
of transactions--to enable a health plan to make a decision about 
health care--is incorporated into the definition of attachment 
information, while for the two transmission types in Sec.  162.2001(a), 
and as discussed later in this section, we further specify the purpose.
    We are proposing the following three types of transmissions:
     In Sec.  162.2001(a)(1) and (a)(2), a health care 
attachments transaction is either of two different types of 
transmissions, both of which are sent from a health care provider to a 
health plan and where the type of information being transmitted in both 
is attachment information.
     In Sec.  162.2001(b), a health care attachments 
transaction is one type of transmission that is sent from a health plan 
to a health care provider, and where the type of information being 
transmitted is a request for attachment information.
    The purpose for the transmission described in Sec.  162.2001(a)(1) 
is to support a referral certification and authorization transaction, 
as described in Sec.  162.1301(a), while the purpose for the 
transmission described in Sec.  162.2001(a)(2) is to support a health 
care claims or equivalent encounter information transaction, as 
described in 162.1101. We are also proposing to make a conforming 
change to the definition of ``transaction'' in Sec.  160.103, by 
replacing ``(10) Health claims attachments'' with ``(10) Health care 
attachments.''
3. Proposed Adoption of Electronic Health Care Attachments Transaction 
Standards
    As noted earlier, the NCVHS has held a number of hearings and made 
several sets of recommendations to the Secretary on attachments 
standards.\14\ By letter dated July 5, 2016, the NCVHS consolidated its 
earlier recommendations on attachments and advised that updated 
versions of the available standards were ready for industry use, noting 
that one of the most significant findings from its February 16, 2016 
hearing was the general consensus across testifiers about the need for 
HHS to adopt the NCVHS-recommended standards.\15\ The NCVHS noted that 
it considered a number of criteria and factors in evaluating standards, 
particularly whether candidates would meet the goals of administrative 
simplification. Among other recommendations, the NCVHS advised that 
attachments standards for queries, and both solicited and unsolicited 
responses, should support structured and unstructured data. The NCVHS 
concluded that its recommended standards meet the industry's business 
needs, improve administrative efficiency and reduce administrative 
burden, are flexible and agile to meet future technology developments 
and health system changes, and are mature, adoptable, and enforceable.
---------------------------------------------------------------------------

    \14\ https://ncvhs.hhs.gov/reports/recommendation-letters/.
    \15\ See ``Recommendations for the Electronic Health Care 
Attachment Standard,'' https://ncvhs.hhs.gov/wp-content/uploads/2018/03/2016-Ltr-Attachments-July-1-Final-Chair-CLEAN-for-Submission-Publication.pdf.
---------------------------------------------------------------------------

    The NCVHS noted that its recommended standards represented a 
collaboration between X12 and HL7, with X12 providing for existing 
provider/payer EDI, and HL7 providing for the CDA. Specifically, the 
NCVHS recommended that HHS adopt the following standards for 
attachment-related transactions:
     For requesting attachments, the following standards:
    ++ For claim-related attachment requests, the ASC X12N 277 Health 
Care Claim Request for Additional Information.
    ++ For non-claim-related attachment requests, the ASC X12N 278 
Health Care Service Review--Request for Review and Response--Response.
     For attachment message content and format in the 
transmission of attachment information, the following standards:
    ++ The HL7 CDA R2--Consolidated CDA Templates for Clinical Notes 
R2.1.
    ++ The HL7 Attachment Supplement Specification Request and Response 
Implementation Guide R1.
    ++ The Attachment Type Value Set: Logical Observation Identifier 
Names and Codes (LOINC) developed and maintained by the Regenstrief 
Institute, Inc.

[[Page 78447]]

    ++ The HL7 Implementation Guide for CDA Release 2: Additional CDA 
R2 Templates--Clinical Documents for Payers--Set 1.
     For the routing/envelope of attachment information, the 
following standards:
    ++ The ASC X12N 275 Additional Information to Support a Health Care 
Claim or Encounter.
    ++ The ASC X12N 275 Additional Information to Support a Health Care 
Services Review.
    The health care attachments standards we are proposing are those 
recommended by the NCVHS, and discussed in its July 5, 2016 letter to 
the Secretary. Also, as previously discussed, section 1104(c)(3) of the 
Affordable Care Act requires that the adopted attachments standard be 
``consistent with the X12 Version 5010 transaction standards,'' which 
we interpret as requiring that the proposed health care attachment 
implementation specifications be compatible with X12 standards 
generally, meaning any standard we adopt for attachment information can 
be electronically transmitted by an X12 transmission standard in the 
same transaction.
    While the NCVHS did not recommend specific versions of the X12N 
attachments standards, we are proposing to adopt the X12N Versions 6020 
for both the X12N 277 standard, that is, the X12N 277--Health Care 
Claim Request for Additional Information (006020X313), as well as for 
the X12N 278--Health Care Services Request for Review and Response 
Version (006020X315) standard for the referral certification and 
authorization transaction. We are proposing to adopt Version 6020 of 
these standards because they better harmonize with the X12N 275--
Additional Information to Support a Health Care Claim or Encounter 
Version (006020X314) and the X12N 275--Additional Information to 
Support a Health Care Services Review Version (006020X316) standards we 
are proposing to adopt for a provider to transmit attachment 
information.
    Although it may be possible to use different versions of the 
standards for health plan requests for, and provider transmissions of, 
attachment information, X12 recommended to the NCVHS that all parties 
to those transactions use Version 6020 of the standards as they are 
most compatible with each other.\16\
---------------------------------------------------------------------------

    \16\ Transcript of NCVHS Subcommittee on Standards Hearing on 
Electronic Attachments Standards and Operating Rules, February 27, 
2013: https://ncvhs.hhs.gov/transcripts-minutes/transcript-of-the-february-27-2013-ncvhs-subcommittee-on-standards-hearing/.
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a. Proposed Adoption of X12N Standards for Health Care Attachments 
Transactions
(1) Proposed Adoption of Standards for Request From a Health Plan to a 
Health Care Provider for Attachment Information
(a) X12N 277--Health Care Claim Request for Additional Information 
(006020X313)
    At Sec.  162.2002(e)(1), we propose to adopt the X12N 277--Health 
Care Claim Request for Additional Information (006020X313) as the 
standard a health plan must use to electronically request attachment 
information from a health care provider to support a health care claim. 
We also propose to incorporate the same by reference in Sec.  162.920.
    The X12N 277 contains two noteworthy fields, which we discuss 
sequentially. The first is the health plan assigned claim control 
number, which allows for document reassociation. A health plan assigns 
a claim control number to associate its request with a provider's 
electronic health care claim. The health care provider then uses the 
health plan assigned claim control number in the X12 275 standard in 
the health care attachments transaction, discussed later in this 
proposed rule, that it transmits to the health plan, enabling the 
health plan to associate the attachment information with the previously 
submitted health care claim.
    The other noteworthy X12N 277 field is for LOINC for HIPAA 
Attachments. The X12N 277 standard requires the use of the appropriate 
LOINC for HIPAA Attachments data element to identify the specific 
attachment information the health plan is requesting. The previously 
referenced 2017 WEDI whitepaper illustrates how the LOINC code is used 
in an X12 277 standard in the following hypothetical scenario: A 
provider performs a particular surgery for which there is no HCPCS code 
and sends the health plan a health care claim using a Not Otherwise 
Classified (NOC) procedure code. The health plan requires additional 
information about the procedure to adjudicate the claim, and sends the 
health care provider an X12N 277 Health Care Claim Request for 
Additional Information request using the appropriate LOINC for HIPAA 
Attachments code to specify the surgical operative note it needs.\17\
---------------------------------------------------------------------------

    \17\ Workgroup for Electronic Data Interchange (WEDI), 
``Guidance on Implementation of Standard Electronic Attachments for 
Healthcare Transactions'' https://www.wedi.org/2017/11/17/guidance-on-implementation-of-standard-electronic-attachments-for-healthcare-transactions/.
---------------------------------------------------------------------------

(b) X12N 278--Health Care Services Request for Review and Response 
(006020X315)
    At Sec.  162.2002(e)(2), we propose to adopt the X12N 278--Health 
Care Services Request for Review and Response (006020X315) as the 
standard a health plan must use to electronically request attachment 
information from a health care provider to support a prior 
authorization transaction. We also propose to incorporate the same by 
reference in Sec.  162.920. The X12 278 standard is unique in that it 
is also used for a health care provider's request for prior 
authorization, as reflected at Sec.  162.1302(b)(2)(ii). We are 
proposing to adopt Version 6020 of that standard, which would represent 
a modification to the currently adopted Version 5010 of the X12N 278. 
As we discussed previously, the NCVHS indicated that the updated 
version, that is, Version 6020, of the X12 278 is more compatible with 
the Version 6020 X12N 275 standard we are proposing for a health care 
provider's transmission of an attachment information transaction to a 
health plan in support of a prior authorization request. Version 6020 
of the X12 278 also contains the same two noteworthy fields as the X12N 
277, that is, the health plan assigned claim control number and the 
field for LOINC for HIPAA Attachments. In section II.D. of this 
proposed rule we discuss our proposed modification to update the 
current HIPAA standard, Version 5010 of the X12 278, to Version 6020.
(2) Proposed Adoption of Standards for Response From a Health Care 
Provider to a Health Plan for Attachment Information
(a) X12 275--Additional Information to Support a Health Care Claim or 
Encounter (006020X314)
    We propose to adopt, at Sec.  162.2002(d), the X12N 275--Additional 
Information to Support a Health Care Claim or Encounter (006020X314) as 
the standard a provider must use to electronically transmit attachment 
information to a health plan to support a health care claims or 
equivalent encounter information transaction. We also propose to 
incorporate the same by reference in Sec.  162.920.
    The X12N 275--Additional Information to Support a Health Care Claim 
or Encounter standard may be used with respect to both solicited and 
unsolicited attachment information. Using the previous example of a 
surgery for which there is not a HCPCS code, in the case where a health 
plan has solicited attachment information, the provider would reply to 
the X12N 277

[[Page 78448]]

request from the plan using the X12N 275 to convey the operative note 
as the attachment information. In the unsolicited scenario, the 
provider could concurrently transmit the X12N 275--Additional 
Information to Support a Health Care Claim or Encounter and a claim 
using the X12N 837 to enable the health plan to make a decision about 
the claim at the time of initial claim processing.
    We note that the X12N 275--Additional Information to Support a 
Health Care Claim or Encounter claims attachment standard, as well as 
the X12N 275--Additional Information to Support a Health Care Services 
Review prior authorization standard (discussed in this section of this 
proposed rule), do not themselves contain claim or prior authorization 
attachment information. Rather, the standards serve as the electronic 
envelope for attachment information that is embedded in an HL7 
standard. We describe in detail the specific HL7 standards for 
embedding attachment information in this section of the proposed rule, 
but the critical concept is that the health care attachment information 
is transported by the X12N 275 standard.
(b) X12N 275--Additional Information To Support a Health Care Services 
Review (006020X316)
    We propose, at Sec.  162.2002(c), to adopt the X12N 275--Additional 
Information to Support a Health Care Services Review (006020X316) as 
the standard a provider must use to electronically transmit attachment 
information to a health plan to support a health care provider's 
request for the review of health care to obtain an authorization for 
the health care; in other words, a prior authorization request. We also 
propose to incorporate the same by reference in Sec.  162.920.
    As we described in greater detail in our proposal to adopt the X12 
275--Additional Information to Support a Health Care Claim or 
Encounter, this standard also can be sent in a solicited or unsolicited 
manner. Using our example of a surgery for which there is no HCPCS 
code, for solicited attachment information the provider would reply to 
the X12N 278 request from the health plan using the X12N 275 standard 
that conveys the operative note. In the unsolicited scenario, the 
provider could concurrently transmit the X12N 275 Additional 
Information to Support a Health Care Services Review and a prior 
authorization request using the X12N 278 to enable the health plan to 
make a decision about the prior authorization without additional 
requests for information.

B. Proposed Adoption of HL7 Implementation Guides for Health Care 
Attachment Information

    The HL7 CDA standard is the only currently available SSO-created, 
NCVHS-recommended standard in the United States with published 
implementation specifications designed to support the HIPAA 
transactions. Other standards for the exchange of clinical information 
are being developed and piloted but, due in part to its readiness, we 
believe the HL7 CDA is the most appropriate standard for adoption at 
this time.
    We are proposing to adopt the following three HL7 implementation 
guides as HIPAA standards for the attachment information included in 
health care attachments transactions:

 HL7 Implementation Guide for CDA Release 2: Consolidated CDA 
Templates for Clinical Notes (US Realm) Draft Standard for Trial Use 
Release 2.1, Volume 1--Introductory Material, June 2019 with Errata 
(hereafter Volume One or C-CDA Volume One or C-CDA 2.1)
 HL7 Implementation Guide for CDA Release 2: Consolidated CDA 
Templates for Clinical Notes (US Realm) Draft Standard for Trial Use 
Release 2.1, Volume 2--Templates and Supporting Material, June 2019 
with Errata (hereafter Volume Two or C-CDA Volume Two or C-CDA 2.1)
 HL7 CDA R2 Attachment Implementation Guide: Exchange of C-CDA 
Based Documents, Release 1, March 2017 (hereafter the Attachment 
Implementation Guide)

    Generally, the Attachment Implementation Guide specifies how to 
combine HL7 and X12 standards to transmit health care attachments 
transactions. For example, it contains instructions with respect to how 
to construct electronic health care attachments transactions, including 
how to attach and send the attachment information using the proposed 
X12N health care attachments standards. It also contains instructions 
for health plans to utilize the necessary LOINC codes for health plans 
to request health care attachments from a health care provider, and for 
providers to identify health care attachments document templates when 
transmitting them to a health plan. For the transmissions described in 
proposed Sec.  162.2001, that is, transmissions of attachment 
information from a health care provider to a health plan for the 
specified purposes, and requests for attachment information from a 
health plan to a health care provider, we would require the use of the 
Attachment Implementation Guide at Sec.  162.2002(a). We propose to 
incorporate this HL7 standard by reference in Sec.  162.920 in a new 
paragraph (e) where we provide information about the availability of 
the HL7 standards we are proposing.
    We are also proposing that for the transmissions of attachment 
information from a health care provider to a health plan for the 
specified purposes, as described in proposed Sec.  162.2001(a), we 
would require the use of Volume One and Volume Two, and would include 
these requirements at Sec.  162.2002(b)(1) and (b)(2), respectively. 
Collectively, these standards are instructions for the use of specific 
sections of the CDA, a larger set of clinical information standards 
developed by HL7, that provide specifications for users to create the 
HL7 document templates for the clinical information that would be used 
in the proposed health care attachments transactions.
    Attachment information comes in two variants, ``structured'' and 
``unstructured,'' and the proposed HL7 standards support both. A 
structured document is one that has a high degree of organization that 
is able to be interpreted by a computer, includes a header that 
contains metadata about the clinical information found in the body of 
the document, and a structured body. The clinical information contained 
in the document is subdivided into systematic sections and entries that 
can be identified and sorted by a computer using descriptive codes. HL7 
Volume One and Volume Two instruct readers how to assemble the segments 
into a standardized set of document sections known as a document 
``template,'' which is essentially a set of C-CDA components identified 
by a LOINC code, and include templates for the most common paper 
documents that serve as attachment information. An HL7 structured 
template is in a format that can be easily displayed in a human-
readable format, while also enabling a computer to make an automated 
decision about a claim or a prior authorization request. Volume One and 
Volume Two also contain instructions for creating an unstructured 
document template for attachment information for which HL7 has not 
created a structured template. Unstructured documents still utilize an 
HL7 standard header that includes meta-data about the clinical 
information found in the document body, but the body does not contain 
tags that systematically identify the attachment information within. 
Examples of unstructured documents include medical imaging files, 
audio, video, and legacy attachment information such as scanned paper

[[Page 78449]]

documents. Unstructured content may also include attachment information 
that is not collected in a health care environment, but that a health 
plan may require for payment decisions, such as delivery receipts, home 
inspection reports, or patient-created diabetic logs.
    The Attachment Implementation Guide also specifies how to construct 
a health care attachments transaction when Volume One or Volume Two do 
not provide a document template for particular attachment information. 
The Attachment Implementation Guide contains three criteria that any 
document template to be used as a health care attachment must meet if 
it is not already specified in one of the proposed implementation 
guides: (1) the template must be developed and published through the 
HL7 standards process; (2) the new template must be designated by HL7 
as being compatible with a C-CDA 2.1 implementation specification and 
for use in the United States; and (3) a LOINC code for the template 
must be created by Regenstrief via its code creation process as 
previously described. This means that once a C-CDA 2.1 implementation 
guide-compatible document template has been created by HL7 and is 
assigned a LOINC code, which happens upon request of the HL7 Payer/
Provider Information Exchange Workgroup once HL7 creates a new 
template, it may be used as attachment information in a health care 
attachments transaction. We invite comment on the proposed adoption of 
the HL7 standards--Volume One, Volume Two, and the Attachment 
Implementation Guide.

C. Electronic Signatures

    Section 1173(e)(1) of the Act provides that the Secretary, in 
coordination with the Secretary of Commerce, must adopt standards 
specifying procedures for the electronic transmission and 
authentication of signatures for HIPAA transactions. Pursuant to that 
requirement, we proposed to adopt standards for electronic signatures 
in the August 12, 1998 proposed rule (63 FR 43242) titled ``Security 
and Electronic Signature Standards.'' That proposal, never finalized 
with respect to electronic signatures, would not have required the use 
of electronic signatures with any specific transaction. Rather, the 
proposed rule recognized that electronic signatures would require 
certain implementation features, including message integrity, 
nonrepudiation, and user authentication, and proposed that the standard 
for electronic signatures would be digital signatures--electronic 
stamps that contain information about both the user creating the 
signature and the document being signed--as the only technically mature 
means available that could provide for nonrepudiation in an open 
network environment. In comments on the proposed rule, industry 
overwhelmingly indicated that then-available technology was 
insufficient to enable the proposed provisions to be implemented. As 
such, in the February 20, 2003 final rule (68 FR 8334) titled, ``Health 
Insurance Reform: Security Standards'' (hereafter, February 2003 
Security rule), we elected not to finalize the proposal, instead 
indicating that a final rule on electronic signature standards would be 
published at a later date. In the September 23, 2005 proposed rule 
titled HIPAA Administrative Simplification: Standards for Electronic 
Health Care Claims Attachments (70 FR 55990), we recognized that an 
electronic signature consensus standard still did not exist and that no 
federal standard governed the use of electronic signatures for private 
sector health care services. We sought industry input on how signatures 
should be handled when an attachment is requested and transmitted 
electronically.
    Signatures play a vital role with respect to the documentation of 
health care, as a signature is often the only indicator available to 
health plans and health care providers that attachment information has 
been reviewed and approved by the service provider or other clinician 
with appropriate authority to supervise care. Health care entities 
recognize numerous legal and compliance best practices for clinician 
attestation of medical record documentation consistent with applicable 
federal and state laws and regulations, accreditation standards, payer 
requirements, documentation requirements for clinical services offered, 
and technology functionalities.\18\
---------------------------------------------------------------------------

    \18\ Electronic Signature, Attestation, and Authorship, AHIMA: 
https://bok.ahima.org/PdfView?oid=107152.
---------------------------------------------------------------------------

    Health care best practices, such as those of the National Committee 
for Quality Assurance (NCQA), generally direct that all entries in the 
medical record contain the author's identification.\19\ A health care 
providers' signature (whether wet--in ink on paper documents--or 
electronic) on medical record documentation generally serves as the 
attestation that the appropriate provider representative has reviewed 
and approved the documentation. Health plans commonly require written 
and signed documentation as evidence of medical necessity for certain 
types of services. For example, in order for a laboratory to submit a 
claim for reimbursement of a laboratory test, a health plan may first 
require a physician visit and a signed physician order. When the 
laboratory later bills a health plan for the test, the plan may ask for 
evidence that it was ordered by an authorized health care provider; if 
the laboratory is unable to produce a signed order, it may not be 
reimbursed.
---------------------------------------------------------------------------

    \19\ ``Guidelines for Medical Record Documentation'', NCQA: 
https://www.ncqa.org/wp-content/uploads/2018/07/20180110_Guidelines_Medical_Record_Documentation.pdf.
---------------------------------------------------------------------------

1. Proposed Definition of Electronic Signature
    An electronic signature can be any of a number of types of marks or 
data that indicate a signatory's intent to sign. Examples of electronic 
signatures include an online check box indicating acceptance, a name 
entered by the signer in an online form, a signing device at a 
commercial checkout line on which a customer writes his or her 
signature, and an image of a signature that was written by hand and 
then scanned into an electronic image format.
    We are proposing to define the term ``electronic signature'' as 
broadly as possible to ensure that it meets health care providers' and 
health plans' needs now and can also encompass future electronic 
signature technologies. However, we propose to narrowly specify the 
scope of the required use of electronic signatures, such that their 
required use would be limited to just attachment information 
transmitted electronically in electronic health care attachments 
transactions. Accordingly, the electronic signature standard we are 
proposing at Sec.  162.2002(f) would pertain only to electronic 
signatures for attachment information transmitted by a health care 
provider in an electronic health care attachments transaction.
    At Sec.  162.103, we propose to define electronic signature as 
follows: Electronic signature means an electronic sound, symbol, or 
process, attached to or logically associated with attachment 
information and executed by a person with the intent to sign the 
attachment information.

[[Page 78450]]

2. Proposed Electronic Signature Standard
    Electronic signatures vary in reliability and value based on the 
type of technology used, and any HIPAA electronic signature standard 
has to meet the needs of both health plans and health care providers 
that produce and use attachment information. Any standard that we adopt 
needs to support all of the current business functions and uses for 
signatures in the health plan payment decision process while providing 
assurance that attachment information is accurate and unaltered. The 
1998 proposed rule that we mentioned previously, ``Security and 
Electronic Signature Standards,'' enumerated three implementation 
features necessary to achieve these goals: user authentication, message 
integrity, and non-repudiation (63 FR 43257). These core features, 
developed in conjunction with the Department of Commerce's National 
Institute of Standards and Technology and the health care industry, 
remain relevant to electronic signatures today. We discuss each in the 
following sections.
    Authentication is the ability of a health plan to identify and 
verify the identity of the provider who signed a document, and is a 
vital signature characteristic because such verification serves to 
validate the attachment information. Just as a health plan might 
compare a physical signature to a signature card to authenticate a 
health care provider's identity, an electronic signature must provide a 
method of authentication. Some forms of electronic signatures do not 
allow for authentication; for example, a typed signature line in a word 
processing document that indicates it was signed by a physician does 
not have any unique traits that would permit authentication by a health 
plan.
    Because some electronic signatures can be readily manipulated, 
there must also be a mechanism to ensure that signed attachment 
information remains unaltered since the time it was affixed; this 
feature is called message integrity. To maintain message integrity, 
there must be a way to electronically validate that the attachment 
information signed by the health care provider and sent to the health 
plan are identical. Without such a mechanism it would be possible, for 
example, to alter the amount or type of the medical item (such as, 
medication, durable medical equipment, a medical service, etc.) ordered 
by a physician after he or she had completed and signed the order.
    Finally, an electronic signature standard must embody a feature 
known as nonrepudiation, which provides strong assurance of identity 
such that it is difficult for a signatory to later claim that the 
electronic representation is not valid or that he or she did not sign 
the document.\20\ Nonrepudiation is a necessary feature of an 
electronic signature for health care attachments transactions because 
health plans will use attachment information to make administrative 
decisions about payment for health care services and may deny payment 
to a health care provider based on the information in electronically 
signed attachments.
---------------------------------------------------------------------------

    \20\ Office of National Coordinator for Health Information 
Technology (ONC). Identity Management, December 6, 2017: https://www.healthit.gov/sites/default/files/identitymanagementguidev5.13.pdf.
---------------------------------------------------------------------------

    An electronic signature standard must manifest each of these three 
features to suffice for attachment information in electronic health 
care attachments transactions. For example, were a signing system to 
incorporate authentication and nonrepudiation but lack a mechanism to 
ensure message integrity, a health plan could not be confident that the 
attachment information had not been altered since being signed. Or, 
were a signing system to incorporate nonrepudiation and message 
integrity but lack a mechanism for authentication, the health plan 
receiving the attachment information would be assured that the content 
had not been altered and that someone had signed, but it could never be 
certain of the actual signatory. In the previously discussed 1998 and 
2005 proposed rules, HHS identified digital signature technology as the 
only electronic signature approach offering the features of 
authentication, message integrity, and nonrepudiation. We continue to 
believe that digital signature technology is the only electronic 
signature technology that supports all three features.
    We considered proposing, as an electronic signature standard, the 
specifications for electronic signatures that are included in the HL7 
implementation guides we are proposing here for electronic health care 
attachments transactions. But we decided not to pursue that route 
because the specifications included in those guides do not support 
authentication, message integrity, and nonrepudiation.
    However, HL7 has also developed an implementation guide called the 
HL7 Implementation Guide for CDA Release 2: Digital Signatures and 
Delegation of Rights, Release 1 (hereafter Digital Signatures Guide), 
with supplemental specifications that add support for authentication, 
message integrity, and nonrepudiation to their other published 
implementation guides. The Digital Signatures Guide promotes these 
three features by utilizing digital signature technology to implement 
identity management using digital certificates, encryption requirements 
to support message integrity, and multiple signed elements to support 
nonrepudiation. As we previously noted, a digital signature is an 
electronic stamp that contains information about both the user creating 
the signature and the document that is being signed. Digital signatures 
are created using digital certificates to create a secure computer code 
that can be used later to authenticate the signer. At the same time, 
the certificate is used to create another computer code, usually 
referred to as a hash, which can be used by a computer to verify that 
the document has not been changed since it was originally signed; this 
is a mechanism to ensure the integrity of the signed document. In both 
cases, the codes are encrypted so the receiver knows that the codes 
themselves have also not been altered, enabling the receiver to be 
confident that the signature was applied by the authenticated 
individual.
    We note that the Digital Signatures Guide does not include 
requirements for when a document must be signed and by whom. As 
previously discussed, requirements with respect to who may deliver 
health care and how it must be documented via signature vary greatly 
and are developed by health plans and outlined in their provider 
compliance manuals, trading partner agreements, and other contractual 
requirements between health plans and health care providers. We do not 
seek to regulate clinical best practices for documentation or interfere 
with health plans' business needs. Therefore, we are not proposing to 
specify when an electronic signature must be required, but, instead, we 
defer to the industry to continue to establish those expectations. We 
would also limit the scope of the required use of electronic signatures 
to just health care attachments transactions. Accordingly, we are 
proposing to require that, where a health care provider uses an 
electronic signature in a health care attachments transaction, the 
signature must conform to the implementation specifications in the 
Digital Signatures Guide. Specifically, we propose to adopt, at Sec.  
162.2002(f), the HL7 Implementation Guide for CDA Release 2: Digital 
Signatures and Delegation of Rights, Release 1 for electronic 
signatures for attachment information transmitted by a health care 
provider in an electronic health care attachments transactions

[[Page 78451]]

specified in Sec.  162.2001(a). We also propose to incorporate the same 
by reference in Sec.  162.920.
    We solicit comments on the proposed definition of electronic 
signature and the proposed HL7 Implementation Guide as the attachment 
information electronic signatures standard.

D. Proposed Modification to a HIPAA Standard

1. Modifications to Standards
    Section 1174 of the Act requires the Secretary to review the 
adopted standards and adopt modifications to them as appropriate, but 
not more than once every 12 months. Modifications must be completed in 
a manner that minimizes disruption and cost of compliance. Per section 
1175 of the Act, if the Secretary adopts a modification to a HIPAA 
standard or implementation specification, the compliance date for the 
modification may not be earlier than the 180th day following the date 
of the adoption of the modification. The Secretary must consider the 
time needed to comply due to the nature and extent of the modification 
when determining compliance dates, and may extend the time for 
compliance for small health plans if the Secretary deems it 
appropriate.
    Section 162.910 sets out the standards maintenance process and 
defines the role of SSOs and Designated Standard Maintenance 
Organizations (DSMOs). An SSO is an organization accredited by the ANSI 
that develops and maintains standards for information transactions or 
data elements. The two SSOs applicable to this proposed rule are the 
Accredited Standards Committee X12 (X12) and Health Level Seven (HL7). 
On August 17, 2000, the Secretary designated six organizations (see 
Health Insurance Reform: Announcement of Designated Standard 
Maintenance Organizations Notice (65 FR 50373)) to maintain the health 
care transaction standards adopted by the Secretary, and to process 
requests for modifying an adopted standard or for adopting a new 
standard. The six organizations include X12, HL7, and NCPDP, along with 
the National Uniform Billing Committee (NUBC), the National Uniform 
Claim Committee (NUCC), and the Dental Content Committee (DCC) of the 
American Dental Association.
    Section 162.910 also sets forth the procedures for the maintenance 
of existing standards and the adoption of modifications to existing 
standards and new standards. Under Sec.  162.910(c), the Secretary 
considers recommendations for proposed modifications to existing 
standards or proposed new standards, only if the recommendations are 
developed through a process that provides for all of the following:
     Open public access.
     Coordination with other DSMOs.
     An appeal process for the requestor of the proposal or the 
DSMO that participated in the review and analysis if either were 
dissatisfied with the decision on the request.
     An expedited process to address HIPAA content needs 
identified within the industry.
     Submission of the recommendation to the NCVHS.
    Any entity may submit change requests with a documented business 
case to support the recommendation to the DSMO, which receives and 
processes those change requests. The DSMO reviews the request and 
notifies the SSO of the recommendation for approval or rejection. 
Should the changes be recommended for approval, the DSMO also notifies 
the NCVHS and suggests that a recommendation for adoption be made to 
the Secretary of HHS. Information pertaining to the designation of a 
DSMO and its responsibilities can be found in the Transactions Rule and 
the Notice, which were both published on August 17, 2000 (65 FR 50365 
and 50373).
    The modification we are proposing in this rule was developed 
through a process that conforms with Sec.  162.910. In February 2016, 
the NCVHS held hearings to review the Version 6020 X12N 278 
implementation specifications as a standard for health care attachments 
transactions, which X12 recommended be adopted by HHS. Testimony from 
that hearing indicated the need for HHS to adopt the 6020 version of 
the X12N 278, which X12 testified resolves technical issues with 
Version 5010 of the X12N 278.\21\ In its 2016 letter to the Secretary, 
the NCVHS recommended the adoption of the X12N 278 for health care 
attachments transactions, but did not recommend a specific version. 
Rather, the NCVHS recommended that the Secretary consider adopting the 
version expected to be in effect at the time the transactions standards 
are mandated.\22\ Version 6020 of the X12N 278 is the most current 
version of the referral certification and authorization transaction 
standard.
---------------------------------------------------------------------------

    \21\ https://ncvhs.hhs.gov/transcripts-minutes/transcript-of-the-february-16-2016-ncvhs-subcommittee-on-standards/.
    \22\ https://ncvhs.hhs.gov/wp-content/uploads/2018/03/2016-Ltr-Attachments-July-1-Final-Chair-CLEAN-for-Submission-Publication.pdf.
---------------------------------------------------------------------------

2. Modification to Referral Certification and Authorization Transaction 
Standard
    As just discussed, the NCVHS recommended that HHS adopt the 
referral certification and authorization transaction standard (ASC X12N 
278) for non-claims-related attachment requests and responses. Although 
the NCVHS did not recommend a specific version of the standard, we are 
proposing to adopt Version 6020 of the X12N 278 because Version 6020 
better harmonizes with the Additional Information to Support a Health 
Care Services Review Version--X12N 275- (006020X316) standard we are 
proposing to adopt for providers transmitting attachment information. 
As we also discussed, while it may be possible to use different 
versions of the standards for health plan requests for, and provider 
transmissions of, attachment information, X12 advised against it, 
recommending to the NCVHS \23\ that all parties to those transactions 
use Version 6020 of the standards as they are most compatible with each 
other.
---------------------------------------------------------------------------

    \23\ Transcript of NCVHS Subcommittee on Standards Hearing on 
Electronic Attachments Standards and Operating Rules, February 27, 
2013: https://ncvhs.hhs.gov/transcripts-minutes/transcript-of-the-february-27-2013-ncvhs-subcommittee-on-standards-hearing/.
---------------------------------------------------------------------------

    Adopting Version 6020 of the X12N 278 for referral certification 
and authorization transactions standard to replace Version 5010 of the 
X12N 278 would be a modification to a standard under HIPAA, similar to 
the previous modifications we adopted when we moved from Version 4010 
to Version 5010 for the X12 standards. Version 6020 of the X12N 278 
includes several changes, some of which are maintenance changes, and 
some of which represent more significant improvements over Version 
5010. The two most significant changes each represent technical 
improvements and structural changes to the standard:
     One important change will better support referral 
certification and authorization transactions for dental services. 
Currently, health care providers are able to accurately report tooth 
status utilizing Version 5010 of the X12N 837 for health care claims, 
but Version 5010 of the X12N 278 cannot support reporting tooth status 
in health care referral certification and authorization transactions. 
Version 6020 of the X12N 278 expands support for reporting the status 
of individual teeth, which enables a health care provider to 
specifically indicate a missing tooth, extracted tooth, tooth to be 
extracted, or impacted tooth in a health care referral

[[Page 78452]]

certification and authorization transaction. We expect this improvement 
in the X12N 278 to minimize or eliminate administrative delays 
attributable to providers having to convey relevant individual tooth 
information outside of the standard transactions process.
     Version 6020 revises and expands the drug authorization 
segment, which includes fields necessary to, for example, identify a 
drug, specify quantity of drug requested, specify drug dosage 
requested, and accommodate related procedure codes. Because Version 
5010 does not enable entities to supply this additional information, 
health plans and providers must utilize cumbersome alternative methods 
to communicate drug information. Therefore, we also expect this 
improvement to minimize or eliminate administrative delays attributable 
to providers having to convey relevant drug information outside of the 
standard transactions process.
    The referral certification and authorization transaction under 
Sec.  162.1301 includes two transmission types from health care 
providers to health plans: prior authorization requests and referral 
certification requests. The X12N 278 standard is required for both 
types of transmission. As discussed, we are proposing that health care 
attachments transactions would apply to prior authorization 
transactions; we are not proposing that they apply to referral 
certification transactions. Although it would be technically feasible 
for us to propose to adopt Version 6020 only for prior authorization 
transmissions specified in Sec.  162.1301(a) and retain Version 5010 
for referral certification transmissions specified in Sec.  
162.1301(b), we are instead proposing Version 6020 for both 
transmission types because it includes improvements over Version 5010 
that better support both transmission types, and we believe it would be 
more burdensome for covered entities to have to maintain both X12N 278 
versions.

E. Proposed Compliance Dates

    We are proposing to adopt new standards and a modification to a 
standard in this proposed rule. Section 1104(c)(3) of the Affordable 
Care Act, which requires the Secretary to adopt a transaction standard 
for health claims attachments, prescribes a 2-year compliance date for 
all covered entities and makes no special provision for small health 
plans, unlike the original HIPAA. In this rule, we are proposing that 
the same health care attachments standards would apply to both claims 
and prior authorization attachments transmissions. As the transmission 
standard for each type of attachment transaction transmission would be 
the same, we believe the compliance date for both types should also be 
the same. In addition, because we are proposing to treat the two 
attachments process together as one transaction in new Subpart T, 
adopting the same compliance timeframe for all covered entities would 
avoid the complications a bifurcated compliance timeframe--one for 
claims processes and another for prior authorization processes--would 
raise.
    When the Secretary adopts a modification to a HIPAA standard, 
section 1175(b)(2) of the Act requires that the compliance date may not 
be earlier than the 180th day following the date of adoption. The 
Secretary must consider the time needed to comply due to the nature and 
extent of the modification when determining a compliance date, and may 
extend the time for small health plans to achieve compliance if the 
Secretary deems it appropriate. The adoption date of a standard or a 
modification is the effective date of the final rule in which the 
adoption or modification is established. The effective date is the date 
the rule amends the Code of Federal Regulations (CFR), which is 
typically 60 days after the date of publication in the Federal 
Register.
1. Proposed Compliance Date for Health Care Attachments and Electronic 
Signatures Standards
    We are proposing to adopt the following seven standards for health 
care attachments transactions and electronic signatures:
     HL7 CDAR2: Attachment Implementation Guide: Exchange of C-
CDA Based Documents, Release 1--March 2017.
     HL7 Implementation Guide for CDA Release 2: Consolidated 
CDA Templates for Clinical Notes (US Realm) Draft Standard for Trial 
Use Release 2.1, Volume 1--Introductory Material, June 2019 with 
Errata.
     HL7 Implementation Guide for CDA Release 2: Consolidated 
CDA Templates for Clinical Notes (US Realm) Draft Standard for Trial 
Use Release 2.1, Volume 2--Templates and Supporting Material, June 2019 
with Errata.
     X12N 275 Additional Information to Support a Health Care 
Services Review (06020X316).
     X12N 275 Additional Information to Support a Health Care 
Claim or Encounter (06020X314).
     X12N 277--Health Care Claim Request for Additional 
Information (006020X313).
     HL7 Implementation Guide for CDA Release 2: Digital 
Signatures and Delegation of Rights, Release 1.
    In accordance with section 1104(c)(3) of the Affordable Care Act, 
which sets a 2-year compliance date, and which makes no provision for 
an extended time for small health plans to achieve compliance, we are 
proposing that the compliance date for these standards would be 24 
months after the effective date of the final rule for all covered 
entities. We would specify these compliance dates in Sec.  162.2002.
2. Proposed Compliance Date for Modification
    Section 1175(b)(2) of the Act requires the Secretary to determine 
an appropriate compliance date for the implementation of modified 
standards, such as the modification of the X12N 278 standard from 
Version 5010 to Version 6020, by taking into account the time needed to 
comply due to the nature and extent of the modification. The Act also 
requires that the compliance date be no earlier than the last day of 
the 180-day period beginning on the date the modification is adopted 
(the effective date of the final rule in which the modification is 
adopted). As discussed previously, we are proposing Version 6020 of the 
X12N 278 as the standard for referral certification and authorization 
transactions to be used by a health plan in conjunction with Version 
6020 of the X12N 275, which a health care provider would use to 
electronically transmit attachment information to a health plan in 
support of a prior authorization request. As the X12N 278 will feature 
in the new health care attachments transaction, we believe it is 
important to align the compliance dates for the proposed modification 
to the X12N 278 standard and the health care attachments standards. 
Accordingly, we are proposing that covered entities would need to 
comply with Version 6020 of the standard 24 months after the effective 
date of the final rule. We would reflect this compliance date in Sec.  
162.1302 by: (1) revising paragraph (c) to specify only the standard 
identified in paragraph (b)(2)(i); and (2) adding new paragraph (d) to 
require covered entities to use, in paragraph (d)(1), Version 5010 X12N 
278 for 24 months after the effective date of the final rule, and in 
paragraph (d)(2), Version 6020 X12N 278 on and after 24 months after 
the effective date of the final rule. We solicit comments on this 
proposed approach.

F. Proposed Incorporation by Reference

    This proposed rule proposes to incorporate by reference: (1) X12 
275--

[[Page 78453]]

Additional Information to Support a Health Care Claim or Encounter 
(006020X314); (2) X12N 275--Additional Information to Support a Health 
Care Services Review (006020X316); (3) X12N 277--Health Care Claim 
Request for Additional Information (006020X313); and (4) X12N 278--
Health Care Services Request for Review and Response Version 
(006020X315) standard for the referral certification and authorization 
transaction implementation guides.
    The X12 275--Additional Information to Support a Health Care Claim 
or Encounter implementation guide provides instructions to assist those 
who send additional supporting information or who receive additional 
supporting information to a health care claim or encounter. The 
implementation guide for X12N 275--Additional Information to Support a 
Health Care Services Review implementation guide contains the data 
elements used to communicate individual patient information requests 
and patient information (either solicited or unsolicited) between 
separate health care entities in a variety of settings to be consistent 
with confidentiality and use requirements. Instructions to collect 
patient information consisting of demographic, clinical and other 
supporting data are provided.
    The X12N 277--Health Care Claim Request for Additional Information 
implementation guide contains the format and establishes the data 
contents of the Health Care Information Status Notification Transaction 
Set for use within the context of an Electronic Data Interchange (EDI) 
environment. This transaction set can be used by a health care payer or 
authorized agent to notify a provider, recipient, or authorized agent 
regarding the status of a health care claim or encounter or to request 
additional information from the provider regarding a health care claim 
or encounter, health care services review, or transactions related to 
the provisions of health care.
    X12N 278--Health Care Services Request for Review and Response 
Version implementation guide contains the format. It establishes the 
data contents of the Health Care Services Review Information 
transaction set used within the context of an Electronic Data 
Interchange (EDI) environment. This transaction set can be used to 
transmit health care service information, such as subscriber, patient, 
demographic, diagnosis, or treatment data for the purpose of request 
for review, certification, notification, or reporting the outcome of a 
health care services review. Expected users of this transaction set are 
payors, plan sponsors, providers, utilization management, and other 
entities involved in health care services review.
    This proposed rule proposes to incorporate by reference: (1) HL7 
CDA R2 Attachment Implementation Guide: Exchange of C-CDA Based 
Documents, Release 1, March 2017; (2) HL7 Implementation Guide for CDA 
Release 2: Consolidated CDA Templates for Clinical Notes (US Realm) 
Draft Standard for Trial Use Release 2.1, Volume 1--Introductory 
Material, June 2019 with Errata; and (3) HL7 Implementation Guide for 
CDA Release 2: Consolidated CDA Templates for Clinical Notes (US Realm) 
Draft Standard for Trial Use Release 2.1, Volume 2--Templates and 
Supporting Material, June 2019 with Errata.
    The HL7 CDA R2 Attachment Implementation Guide: Exchange of C-CDA 
Based Documents, Release 1, March 2017, defines the requirements for 
sending and receiving standards-based electronic attachments. It does 
so by applying additional constraints onto standards in common use for 
clinical documentation and by specifying requirements for sending and 
receiving systems for attachment requests and response messages. It 
defines the set of attachment documents as those that contain the 
minimum standard metadata to support basic document management 
functions, including identification of patients and providers, the type 
of document, date of creation, encounter information, and a globally 
unique document identifier.
    HL7 Implementation Guide for CDA Release 2: Consolidated CDA 
Templates for Clinical Notes (US Realm) Draft Standard for Trial Use 
Release 2.1, Volume 1--Introductory Material, June 2019 with Errata and 
HL7 Implementation Guide for CDA Release 2: Consolidated CDA Templates 
for Clinical Notes (US Realm) Draft Standard for Trial Use Release 2.1, 
Volume 2--Templates and Supporting Material, June 2019 with Errata 
implementation guides contain a library of CDA templates, incorporating 
and harmonizing previous efforts from HL7. It represents the 
harmonization of the HL7 Health Story guides, HITSP C32, related 
components of IHE Patient Care Coordination (IHE PCC), and Continuity 
of Care (CCD). This R2.1 guide was developed and produced by the HL7 
Structured Documents Workgroup. It updates the C-CDA R2 (2014) guide to 
support ``on-the-wire'' compatibility with R1.1 systems C-CDA Release 
2.1 implementation guide, in conjunction with the HL7 CDA Release 2 
(CDA R2) standard, is to be used for implementing the following CDA 
documents and header constraints for clinical notes.
    The materials we propose to incorporate by reference are available 
to interested parties and can be inspected at the CMS Information 
Resource Center, 7500 Security Boulevard, Baltimore, MD 21244-1850. The 
X12 implementation guides are available at GLASS, sso.x12.org. The HL7 
implementation guides are also available through the internet at 
www.HL7.org. A fee is charged for all implementation guides. Charging 
for such publications is consistent with the policies of other 
publishers of standards. If we wish to adopt any changes in this 
edition of the Code, we would submit the revised document to notice and 
comment rulemaking.

IV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    The burden associated with the information collection requirements 
contained in Sec.  162.1302 of this document are subject to the PRA; 
however, this one-time burden was previously approved and accounted for 
in the information collection request under OMB control number 0938-
0866 and titled ``CMS-R-218: HIPAA Standards for Coding Electronic 
Transactions.'' This information collection request will be revised and 
reinstated to incorporate any proposed additional transaction standards 
and proposed modifications to transaction standards not currently 
captured in the PRA package associated with OMB approval number 0938-
0866.
    In addition, the collection requirements associated with this 
demonstration do not impose information collection and record

[[Page 78454]]

keeping requirements, because they meet the ``information'' definition 
exception under 5 CFR 1320.3(h)(4) which states: ``Information'' does 
not generally include items in the following categories: (4) Facts or 
opinions submitted in response to general solicitations of comments 
from the public, published in the Federal Register or other 
publications, regardless of the form or format thereof, provided that 
no person is required to supply specific information pertaining to the 
commenter, other than that necessary for self-identification, as a 
condition of the agency's full consideration of the comment.
    If you comment on this information collection, that is, reporting, 
recordkeeping or third-party disclosure requirements, please submit 
your comments electronically as specified in the ADDRESSES section of 
this proposed rule. Comments must be received on/by February 21, 2023.

V. Regulatory Impact Analysis

A. Statement of Need

    This rule proposes to adopt and modify standards, pursuant to HIPAA 
Administrative Simplification statutory provisions, for the electronic 
transmission of health care attachments, inclusive of attachments 
standards for both health care claims and prior authorizations. The 
health care industry has made it clear via NCVHS testimony, WEDI 
presentations, CAQH reports and direct inquiry that there is a clear 
need for government action with regard to attachments standards in 
order to bring consistency and reliable communications among the 
partners involved in health care transactions that require attachments. 
As a result of the absence of a federal attachments standard, health 
plans, providers and vendors lack the direction needed to support broad 
use of automation in the attachment workflow or for industry to 
coalesce around the use of even a small number of electronic solutions. 
In addition, lack of an attachments standards has deterred industry 
stakeholders from investing in system implementations to automate the 
attachments workflow, requiring a large manual administrative burden 
for the exchange of medical documentation. Industry SSOs and 
stakeholder alliances report this automation would yield substantial 
labor cost savings and administrative burden reduction. We believe 
standardizing electronic attachments transmissions would facilitate 
prior authorization decisions and claims processing, which would result 
in a decreased burden on providers and health plans, and quicker 
delivery of services to patients.

B. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, 
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 
1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 
1999), and the Congressional Review Act (5 U.S.C. 804(2)).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health, and safety effects, distributive impacts, and equity). Section 
3(f) of Executive Order 12866 defines a significant regulatory action 
as an action that is likely to result in a rule: (1) having an annual 
effect on the economy of $100 million or more in any 1 year, or 
adversely and materially affecting a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or state, local or tribal governments or communities (also 
referred to as economically significant); (2) creating a serious 
inconsistency or otherwise interfering with an action taken or planned 
by another agency; (3) materially altering the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raising novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with economically significant effects ($100 million or more in any 1 
year). Based on our estimates, OMB's Office of Information and 
Regulatory Affairs has determined this rulemaking is ``economically 
significant'' as measured by the $100 million threshold. We believe 
that covered entities have already largely invested in the hardware, 
software, and connectivity necessary to conduct the new and modified 
standards proposed. We anticipate that the adoption of these changes 
would result in costs that would be outweighed by the benefits. 
Accordingly, we have prepared a Regulatory Impact Analysis that to the 
best of our ability presents the costs and benefits of the proposed 
rulemaking.

C. Regulatory Flexibility Analysis

    Executive Order 13272 requires that HHS thoroughly review rules to 
assess and take appropriate account of their potential impact on small 
businesses, small governmental jurisdictions, and small organizations 
(as mandated by the Regulatory Flexibility Act (RFA)). The RFA requires 
agencies to analyze options for regulatory relief of small entities, if 
a rule has a significant impact on a substantial number of small 
entities. If a proposed rule may have a significant economic impact on 
a substantial number of small entities, then the proposed rule must 
discuss steps taken, including alternatives considered, to minimize the 
burden on small entities. The RFA does not define the terms significant 
economic impact or substantial number. The Small Business 
Administration (SBA) advises that this absence of statutory specificity 
allows what is significant or substantial to vary, depending on the 
problem that is to be addressed in rulemaking, the rule's requirements, 
and the preliminary assessment of the rule's impact. Nevertheless, HHS 
typically considers a significant impact to be three to five percent or 
more of the affected entities' costs or revenues.
    The RFA generally defines a small entity as (1) a proprietary firm 
meeting the SBA size standards, (2) a not-for-profit organization that 
is not dominant in its field, or (3) a small government jurisdiction 
with a population of less than 50,000. The North American Industry 
Classification System (NAICS) is used in the U.S., Canada, and Mexico 
to classify businesses by industry.\24\ While there is no distinction 
between small and large businesses among the NAICS categories, the SBA 
develops size standards for each NAICS category. The most recently 
available update to the NAICS went into effect for the 2017 reference 
year, and the most recent SBA small business size regulations and Small 
Business Size Standards by NAICS Industry tables appear at 13 CFR 
121.201. We have determined that the covered entities and their vendors 
affected by this proposed rule likely fall primarily in the categories 
listed in Table 1.
---------------------------------------------------------------------------

    \24\ http://www.sba.gov/content/small-business-size-standards.

[[Page 78455]]



     Table 1--SBA Size Standards for Applicable NAICS Industry Codes
------------------------------------------------------------------------
                                                         SBA standard ($
       NAICS code               NAICS description          in million)
------------------------------------------------------------------------
446110..................  Pharmacies and drug stores..              30.0
522320..................  Financial transaction                     41.5
                           processing, reserve, and
                           clearinghouse activities.
524114..................  Direct health and medical                 41.5
                           insurance carriers.
541511..................  Custom computer programming               30.0
                           services.
62111...................  Offices of physicians.......              12.0
621210..................  Offices of dentists.........               8.0
621491..................  Health plans................              35.0
6221....................  Hospitals...................              41.5
------------------------------------------------------------------------

    Most hospitals and most other providers and suppliers are small 
entities, either by nonprofit status or by having revenues of less than 
$8.0 million to $41.5 million in any 1 year. Accordingly, it is our 
normal practice to treat all health care providers as small entities. 
For providers, the changes proposed by this rule may involve software 
upgrades for practice management and EHR systems. Thus, we expect that 
the vast majority of physicians and other health care provider 
practices will need to make relatively small changes in their systems 
and in their processes, but may incur additional service fees from 
their system vendors for additional functionality. Some of the smallest 
provider entities may elect to continue their current manual processes. 
We include pharmacies in this analysis, and consider most of them to be 
small businesses. While we believe few health plans meet the small 
business size standard, many health plans are non-profit organizations 
and would be considered small businesses; but we are unable to identify 
data to help us distinguish the number of these entities and therefore 
solicit industry feedback to complete this analysis for the final rule. 
We address clearinghouses, but we do not believe that there are a 
significant number of clearinghouses that would be considered small 
entities because of the level of consolidation in the marketplace. 
Because these proposals include initial standards for the exchange of 
both administrative and clinical documentation, we also address 
provider practice management system (PMS) and EHR vendors in our 
discussion, but are unable to identify data that would help identify 
the proportion of firms in these markets that meet the small business 
size standards. State Medicaid agencies are excluded from this analysis 
because states are not considered small entities in any RFA.
    Table 8 in the impact analysis presents the estimated 
implementation costs of these proposals on all entities we anticipate 
would be affected by the rule. The data in that table are used in this 
analysis to provide cost information.
1. Number of Small Entities
    We used the latest available (2017) Census business data records 
and other information to determine the number of affected entities, as 
summarized in Table 2.

                  Table 2--Number of Affected Entities
------------------------------------------------------------------------
                                                        Number of entity
                    Type of entity                          firms or
                                                         establishments
------------------------------------------------------------------------
Hospitals.............................................             5,544
Physicians............................................           171,722
Dentists..............................................           125,329
Pharmacies............................................            19.234
Private Health Plans..................................               772
Government Health Plans...............................                 3
Clearinghouses........................................               162
Vendors...............................................             1,000
                                                       -----------------
    Totals............................................           323,766
------------------------------------------------------------------------

    Based on the latest available (2017) Census business data records, 
we estimate that 321,639 health care provider entities may be 
considered small entities either because of their nonprofit status or 
because of their revenues, as detailed in Table 3. Approximately two 
percent (5,544) of these are hospitals, 57 percent (171,722) are 
physician practices, and 41 percent (125,329) are dental practices. To 
count hospitals, we are using data at the level of establishments, and 
to count physicians and dentists we are using data at the level of 
firms, as we did in the August 22, 2008 proposed rule titled ``Health 
Insurance Reform; Modifications to the Health Insurance Portability and 
Accountability Act (HIPAA) Electronic Transaction Standards'' (73 FR 
497742, 49758). We believe health information technology (HIT) systems 
are still more likely to differ at the level of the enterprise rather 
than at the level of the firm in hospitals. We believe that this way of 
counting may overstate the number of affected entities in these 
segments, given the recent trends toward consolidation among and 
between provider types and toward increasing integration of HIT systems 
across collaborating organizations. However, this overestimation may 
compensate for other types of affected health care providers 
potentially not reflected in these particular NAICS categories. We note 
that the number of 5,544 hospital establishments reflected in the 2017 
Census business data roughly compares with more recent 2021 data from 
the American Hospital Association \25\ indicating a total of 6,090 U.S. 
hospitals, of which approximately 25 percent are for-profit. However, 
we do not have more detail, including data on the size of the hospitals 
in this 25 percent, in order to determine whether any should be 
excluded from the count of small entities.
---------------------------------------------------------------------------

    \25\ Fast Facts on U.S. Hospitals, 2021; accessed 5/24/2021 at: 
https://www.aha.org/statistics/fast-facts-us-hospitals.
---------------------------------------------------------------------------

    The Census business data records indicate that in 2017 there were a 
total of 19,234 pharmacy firms, and we estimate that most of these 
qualify as small entities. Available data do not permit us to clearly 
distinguish small pharmacy firms from firms that are parts of larger 
parent organizations, but we use employee size as a proxy for the firm 
size subject to the SBA size standard. For purposes of this analysis, 
we assume the firms with more than 500 employees (190) represent chain 
pharmacies and those with fewer than 500 employees (19,044) represent 
independently-owned open- or closed-door pharmacies. The 19,044 firms 
with fewer than 500 employees represented 20,901 establishments and 
accounted for total annual receipts of $70.9 billion and average annual 
receipts of $3.7 million--revenue that is well below the SBA standard 
of $30 million. By contrast, the 190 firms with 500 or more employees 
represented 27,123 establishments and accounted for over $211 billion 
in annual receipts, and thus, average annual receipts of $1.1

[[Page 78456]]

billion. Therefore, we assume 19,044 pharmacy firms qualify as small 
entities for this analysis.
    For 2017, the Census Bureau counts 745 entities designated as 
Direct Health and Medical Insurance Carriers and 27 as Health 
Maintenance Organization (HMO) Medical Centers. We assume that these 
772 firms represent health plans that would be subject to these 
proposals. Of the 745 Carriers, those with fewer than 500 employees 
(564) accounted for $35 billion in total and over $62 million in 
average annual receipts, exceeding the SBA size standard of $41.5 
million. Comparable data on the eight smaller HMO Medical Centers is 
not available due to small cell size suppression. Although health plan 
firms may not qualify as small entities under the SBA receipts size 
standard, they may under non-profit status. However, we are not aware 
of data that would help us understand the relationship between health 
plan firm and ownership tax status to quantify the number of such 
firms. Therefore, we are not including an analysis of the impact on 
small health plans.
    Clearinghouses provide transaction processing and data translation 
services to both providers and health plans that would be critical to 
implementing this proposed rule. The applicable NAICS category includes 
many types of financial transaction processing firms other than those 
affected by this rule, so the Census business data cannot be used to 
identify small entities of interest. In previous rulemaking, we have 
identified a largely consolidated market (74 FR 3312). More recently, 
in 2020, the national clearinghouse association, Cooperative Exchange, 
indicated its 23 member companies represent over 90 percent of the 
clearinghouse industry and provide services to over 750,000 provider 
organizations, through more than 7,000 payer connections and 1,000 HIT 
vendors.\26\ While we do not have data on the size of these firms, or 
on the other firms constituting the remaining less than 10 percent of 
the market, we continue to believe the firms in this segment are either 
quite large or are affiliated with other very large firms, and do not 
include them in this small entity analysis. In the January 2009 
Modification final rule, we identified the number of 162 clearinghouse 
entities (74 FR 3318). We are not aware of whether there has been 
further consolidation in this industry since 2009, so we continue to 
estimate that 162 clearinghouses serve the health care market in 
subsequent analyses.
---------------------------------------------------------------------------

    \26\ From testimony submitted for the 8/25/2020 NCVHS 
Subcommittee on Standards Hearing on Proposed CAQH CORE Operating 
Rules;: https://ncvhs.hhs.gov/wp-content/uploads/2020/08/Comments-CAQH%20CORE%20Proposed%20Operating%20Rules%20for%20Federal%20Adoption%20508.pdf.
---------------------------------------------------------------------------

    Other vendors affected by this rule include provider PMS and EHR 
technology system vendors. Counting the affected entities in these two 
segments is complicated, in part because they are increasingly 
integrated. A health care provider entity's PMS and EHR systems may be 
bundled in one product offering, semi-integrated affiliated systems, or 
entirely independent systems offered by separate vendors.\27\ We have 
not identified publicly available data on the number, size, or market 
share of these specific industry stakeholders. NAICS industry category 
541511, Custom Computer Programming Services, seems to be the closest 
category. In 2017, the category included over 62,000 firms with 99 
percent of these having less than 500 employees and 1 percent having 
500 or more employees. However, this total seems out of proportion to 
other potential indicators of market size, leading us to believe it 
significantly overstates the affected entities of interest to the 
proposed rule. For instance, the aforementioned Cooperative Exchange 
description of member firm scope cited connections with 1,000 HIT 
vendors; 2019 market research estimates indicate there are over 500 
vendors offering some type of EHR product; \28\ the 21st Century Cures 
Act: Interoperability, Information Blocking, and the ONC Health IT 
Certification Program final rule (85 FR 25642) estimated the number of 
certified HIT developers with health IT products capable of recording 
electronic health information certified in the 2015 Edition of health 
IT certification criteria to be 458; and the Electronic Health Record 
Association, a trade association of EHR companies addressing national 
efforts to create interoperable EHRs in hospital and ambulatory care 
settings, lists 29 companies as members.\29\ A web search for NAICS 
codes associated with a sampling of these EHR Association member 
companies yielded many different NAICS codes (including some with 
541511), possibly reflecting widely varying scopes of other products 
and services offered by firms in this market segment. Without more 
definitive data on the firms specific to the health care provider PMS 
and EHR business markets, we estimate that the number of affected firms 
is around 1,000, with the bulk of market share served by a relatively 
small number of large entities and the remainder of market share served 
by many smaller entities. However, we are unable to determine how many 
of these smaller entities may meet small business size standards and 
are not subsidiaries of larger firms, so we do not include them in this 
small entity analysis.
---------------------------------------------------------------------------

    \27\ The true cost of switching EHRs. May 30, 2018. Mary Pratt. 
Medical Economics Journal, June 10, 2018 edition, Volume 96, Issue 
10. https://www.medicaleconomics.com/view/true-cost-switching-ehrs.
    \28\ Who are the largest EHR vendors. Jeff Green. EHR in 
Practice. October 18, 2019 https://www.ehrinpractice.com/largest-ehr-vendors.html.
    \29\ https://www.ehra.org/membership/ehra-members.
---------------------------------------------------------------------------

2. Costs to Small Entities
    To determine the impact on the health care providers considered 
small entities for this analysis (identified in the previous section), 
we used the 2017 Census business data to collect revenue estimates and 
compared these to the high and low estimates for the range of costs 
calculated for each industry segment later in this analysis, as 
summarized in Table 8. We calculated the percentage of revenues 
represented by the high and low estimates, and none exceeded the 3 to 5 
percent of revenue threshold, as summarized in Table 3. Thus, for 
purposes of the RFA analysis, we can conclude there is not a 
significant impact on small entities.

                      Table 3--Analysis of Implementation Burden on Small Covered Entities
----------------------------------------------------------------------------------------------------------------
                                                                                 Implementation
                Entity type                 Small entities    Revenue ($ in     cost range ($ in   Cost/revenue
                                                  (#)           billions)          millions)        range  (%)
----------------------------------------------------------------------------------------------------------------
Pharmacies................................          19,044                282                0-0              NA
Vendors...................................              NA                 NA                 NA              NA
Clearinghouses............................              NA                 NA                 NA              NA
Health plans..............................              NA                 NA                 NA              NA

[[Page 78457]]

 
Programmers...............................              NA                 NA                 NA              NA
Physicians................................         171,722                485            218-345       0.04-0.09
Dentists..................................         125,329                126            149-299       0.12-0.24
Hospitals.................................           5,544                994            466-932       0.05-0.09
                                           ---------------------------------------------------------------------
    Subtotal..............................         321,639              1,887          833-1,666       0.04-0.09
----------------------------------------------------------------------------------------------------------------

3. Alternatives Considered
    This rule proposes to adopt standards for ``health care 
attachments,'' which support both health care claims, as required by 
section 1173(a) of the Act, and prior authorization transactions, as 
recommended to the Secretary by NCVHS. It is our understanding that the 
standards recommended to the Secretary by NCVHS, and that we are 
proposing to adopt in this rule, are the only standards applicable to 
health care attachments that are ready for full implementation across 
the industry. Therefore, we considered the following regulatory 
alternatives: (1) not adopt standards for health care attachments, 
allowing for the industry's continued use of multiple processes, (2) 
wait to adopt standards for health care attachments until alternate 
standards, such as FHIR standards, are ready for full implementation 
and recommended to the Secretary by the industry, and (3) adopt a 
different version of the X12 implementation specifications than Version 
6020, the version proposed to adopt in this rule. We chose to proceed 
with the proposals in this rule after identifying significant 
shortcomings with each of these alternatives.
    We chose to propose to adopt attachments standards rather than 
allow for continued use of multiple standards because of the well-
documented costs and administrative burdens associated with the many 
manual or partially electronic processes currently in use. These 
burdens were recently detailed in the 2020 CAQH Index. In response to 
CAQH surveys, industry stakeholders reported that the lack of federal 
standards and mandates has been a principal barrier to adoption of 
fully electronic standardized health care transactions.\30\ Based on 
these survey responses, should we not adopt standards for health care 
attachments, most attachment transactions and many prior authorization 
transactions would continue to be conducted through fully manual 
processes. Not adopting standards for attachment transactions would 
also mean forgoing the opportunity to reduce the unnecessary back-and-
forth between providers and health plans, accelerate claims 
adjudication and patient service approval timeframes, and reduce 
provider resources spent on manual follow-up activities. To the extent 
that future payer policies continue to trend toward increased levels of 
prior authorization or health care attachments requirements, these 
burdens could also increase.
---------------------------------------------------------------------------

    \30\ Last accessed 5/28/2021 at: https://www.caqh.org/explorations/caqh-index-report.
---------------------------------------------------------------------------

    Similarly, we chose not to hold off on proposing the adoption of 
attachment standards until alternate standards, such as FHIR standards, 
are available and recommended by the industry because we believe that 
adoption and implementation of the specifications in this proposed rule 
can immediately reduce the costs and burdens associated with the lack 
of national standards. While we are aware of HL7's efforts to create 
alternative implementation specifications to support health care 
attachments transactions, we note that at the time of writing this 
proposed rule, these FHIR implementation specifications have not been 
finalized nor have they been tested. We also note that the HL7 CDA 
standard we are proposing to adopt in this proposed rule is the only 
currently available SSO-created, NCVHS-recommended standard with 
published implementation specifications designed to support both claims 
and prior authorization attachment transactions. We believe that the 
industry's readiness for improvements to the manual or partially 
electronic process currently in place, as outlined the CAQH stakeholder 
surveys and supported by NCVHS's recommendation to adopt the 
specifications proposed in this rule, support proposing the adoption of 
attachments standards at this time. However, we invite comment on our 
understanding of the readiness of possible implementation 
specifications for health care attachments that support both claim and 
prior authorization transactions and whether the industry supports 
postponement of an adopted standard as it did for the previously 
mentioned proposed rule in the 2005 Federal Register (70 FR 55990), 
titled ``HIPAA Administrative Simplification: Standards for Electronic 
Health Care Claims Attachments; Proposed Rule.''
    Finally, we chose to propose adoption of Version 6020 of the X12 
implementation specifications, rather than an alternate version, such 
as Version 5010, because Version 5010 does not fully support 
attachments transactions. Version 6020 resolves technical issues and 
limitations in Version 5010 to enable attachments transactions that 
support both health care claims and prior authorization transactions. 
We also invite comment on any alternative implementation specifications 
that were not considered but meet the criteria outlined in this 
proposed rule.
4. Conclusion
    As referenced earlier in this section, we use a baseline threshold 
of 3 to 5 percent of revenues to determine if a rule would have a 
significant economic impact on affected small entities. The small 
health care entities do not come close to this threshold. Therefore, 
the Secretary has certified that this proposed rule would not have a 
significant economic impact on a substantial number of small entities. 
However, because of the relative uncertainty in the data, the lack of 
consistent industry data, and our general assumptions, we invite public 
comments on the analysis and request any additional data that would 
help us determine more accurately the impact on all categories of 
entities affected by the proposed rule.
    In addition, section 1102(b) of the Act requires us to prepare a 
Regulatory Impact Analysis if a rule would have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 603 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a metropolitan 
statistical area and has

[[Page 78458]]

fewer than 100 beds. This proposed rule would not have a significant 
effect on the operations of a substantial number of small rural 
hospitals because these entities would rely on contracted health 
information technology (HIT) vendors for the majority of implementation 
investment and efforts such hospitals elect to implement. We note that 
health care providers may choose not to conduct transactions 
electronically. Therefore, they would be required to use these 
standards only for transactions that they conduct electronically and 
would be expected to do so only when the benefits clearly outweigh the 
costs involved. Therefore, the Secretary has certified that this 
proposed rule would not have a significant impact on the operations of 
a substantial number of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates would require spending more in any one 
year than threshold amounts in 1995 dollars, updated annually for 
inflation. In 2022, this threshold is approximately $165 million. This 
proposed rule would impose mandates that would result in the 
expenditure by state, local, and tribal governments, in the aggregate, 
or by the private sector, of more than $165 million in any one year. 
The impact analysis in this proposed rule addresses those impacts both 
qualitatively and quantitatively. In general, each state Medicaid 
Agency and other government entity that is considered a covered entity 
would be required to ensure that its contracted claim processors update 
software and conduct testing and training to implement the adoption of 
the new standards and modified versions of a previously adopted 
standard. However, we have no reason to believe that ongoing 
contractual payment arrangements for these services would necessarily 
increase as a result of the proposed changes. UMRA does not address the 
total cost of a rule. Rather, it focuses on certain categories of cost, 
mainly federal mandate costs resulting from imposing enforceable duties 
on state, local, or tribal governments, or on the private sector; or 
increasing the stringency of conditions in, or decreasing the funding 
of, state, local, or tribal governments under entitlement programs.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on state 
and local governments, preempts state law, or otherwise has federalism 
implications. This proposed rule would have a substantial direct effect 
on state or local governments, could preempt state law, or otherwise 
have a federalism implication because state Medicaid agencies or their 
contractors would be implementing new standards and a modified version 
of an existing standard for which there would be expenses for 
implementation and wide-scale testing.

D. Anticipated Effects

    The objective of this regulatory impact analysis is to summarize 
the costs and benefits of the following proposals:
     Adopting new standards for the exchange of health care 
attachment information consisting of--
    ++ A code set to be used for health care attachments transactions;
    ++ Proposed X12 standards for requesting and transmitting 
attachment information and HL7 standards for clinical information 
content; and
    ++ Proposed electronic signatures standards.
     Modifying the existing standard for referral certification 
and authorization by updating from Version 5010 to Version 6020.
    This portion of the analysis is informed by a review of an earlier 
environmental scan produced for us in 2016 by the MITRE Corporation, 
industry testimony to the NCVHS, whitepapers from the Workgroup for 
Electronic Data Interchange (WEDI), and survey results produced by 
industry consensus-based organizations, and updated web-based research 
on specific topics.
    Consistent with statutory and regulatory requirements, any 
recommendations for the adoption of HIPAA standard updates are the 
outcome of an extensive consensus-driven process that is open to all 
interested stakeholders. The standards development process involves 
direct participatory input from representatives of the industry 
stakeholders required to utilize the transactions.
    For purposes of this analysis, we use the segmentation of health 
care industry stakeholders laid out in the 2009 Modifications final 
rule with some additional detail on vendors supporting the integration 
of the administrative and clinical data. As discussed in this proposed 
rule, providers and payers continue to use manual processing for health 
care attachments, therefore, these stakeholders are relevant for 
purposes of this RIA because there is no adopted health care 
attachments standard. As noted in the 2017 WEDI white paper, most 
payers send hard copy letters to request additional information to 
support a claim or prior authorization submitted by the provider.\31\ 
These segments consist of the following:
---------------------------------------------------------------------------

    \31\ Guidance on Implementation of Standard Electronic 
Attachments for Healthcare Transactions November 2017 Workgroup for 
Electronic Data Interchange. https://www.wedi.org/2017/11/17/guidance-on-implementation-of-standard-electronic-attachments-for-healthcare-transactions/.

     Providers
    ++ Hospitals
    ++ Physicians
    ++ Dentists
    ++ Pharmacies
     Health Plans
    ++ Private Health Plans and Issuers
    ++ Government Health Plans: Medicare, Medicaid, and Veterans 
Administration
     Clearinghouses
     Vendors
    ++ PMS Vendors
    ++ EHR Vendors

    In analyzing the effects of this proposed rule, we referenced the 
2019 and 2020 CAQH Index Reports issued on January 21, 2020 and 
February 3, 2021, respectively.\32\ The 2020 CAQH Index \33\ tracks 
adoption of HIPAA-mandated and other electronic administrative 
transactions and measures progress reducing the costs and burden 
associated with administrative transactions exchanged across the 
medical and dental industries. The CAQH Index includes estimates of the 
number of annual transactions by submission mode (phone, fax, mail, or 
email), electronic (HIPAA standard) or partially electronic (web 
portals or interactive voice response), as well as estimates of the 
associated labor cost and staff time. The reported costs and savings 
account only for the labor time required to conduct transactions, not 
the time and cost associated with gathering information or costs 
associated with the use of clearinghouses or third-party vendors.
---------------------------------------------------------------------------

    \32\ https://www.caqh.org/sites/default/files/explorations/index/report/2019-caqh-index.pdf.
    \33\ https://www.caqh.org/explorations/caqh-index-report.
---------------------------------------------------------------------------

    For two types of transactions directly addressed by this proposed 
rule, attachments, and prior authorization, the 2020 CAQH Index 
estimates the annual industry national savings opportunity of full 
automation adoption of these transactions at $377 million and $417 
million, respectively. These savings would accrue to both health plan 
payers and providers, with the vast majority of estimated savings 
accruing to providers. With respect to the category of providers, the 
report does not provide a breakdown of the type of providers that 
contributed to the survey

[[Page 78459]]

results, but does distinguish between medical and dental providers, and 
does acknowledge partnering with both physician and hospital member 
organizations. Thus, we believe the medical provider savings reported 
include hospital-related responses.
    In contrast to the data on labor cost savings, we are not aware of 
any reports or other industry estimates on the level of additional 
investments needed to fully implement these electronic processes for 
requesting and submitting attachment information, or the proportion of 
such costs that might be passed on to provider or health plan firms. By 
reviewing testimony submitted to the NCVHS and conducting web searches, 
such as for plan, clearinghouse, and vendor electronic data interchange 
(EDI) instructions and services, we understand some stakeholder 
segments have already largely built or acquired the capacity to 
implement these proposals (albeit possibly in inconsistent and 
proprietary ways in the absence of federal standards and operating 
rules). Similarly, based on NCVHS testimony, others (particularly 
health care providers and their vendors) have partially implemented the 
standards.\34\ Thus, we conclude that implementation and readiness to 
fully implement the proposed standards vary among and within covered 
entity industry segments.
---------------------------------------------------------------------------

    \34\ NCVHS Letter to the Secretary of HHS on Recommendations for 
the Electronic Health Care Attachment Standard, July 5, 2016, 
https://ncvhs.hhs.gov/wp-content/uploads/2018/03/2016-Ltr-Attachments-July-1-Final-Chair-CLEAN-for-Submission-Publication.pdf.
---------------------------------------------------------------------------

    We also believe it is likely that firms directly involved in 
deploying additional capacity, in particular in upgrading PMS or EHR 
functionality, would not voluntarily share proprietary and competitive, 
market-sensitive data on the level of additional investment needed or 
on the effects on customer fees. Therefore, as further explained in the 
discussion of cost calculations, we estimate the incremental costs 
involved not through projected cost build-up, but rather as a function 
of the level of impact of implementing the previous HIPAA-standard 
modifications. We seek comment on this approach and on the 
appropriateness of the aggregate level estimates; data reflecting 
estimated changes to firm-specific costs and customer-specific fees 
would preferably be presented in a manner that facilitates aggregation.
    We do not have good information on the extent of adoption of the 
proposed electronic standards for attachment information among industry 
stakeholders because HHS has not adopted an electronic transaction 
standard for health care attachments. However, we believe there is good 
reason to expect the proposed regulatory requirements, combined with 
the administrative cost savings opportunities identified by CAQH, would 
incentivize broad adoption of these attachment standards and lead to a 
significant uptake of the prior authorization standard. The remainder 
of this section provides details supporting the cost-benefit analysis 
for our proposals.
1. Affected Entities
    As with previous standard updates, all HIPAA covered entities would 
be affected by this proposed rule. Covered entities include all health 
plans, all health care clearinghouses, and health care providers that 
transmit health information in electronic form in connection with a 
transaction for which the Secretary has adopted a standard. Therefore, 
they would be required to use these standards only for transactions 
that they conduct electronically. See the Transactions and Code Sets 
rule for a discussion of affected entities (65 FR 50361).
    In general, covered entities (or their vendors) would incur a 
number of one-time costs to implement the new and modified transactions 
in this proposed rule unless they have already implemented an adopted 
HIPAA standard, such as for prior authorization transactions. These 
costs would include analysis of business flow changes, software 
procurement or customized software development, integration of new 
software into existing provider/vendor systems, staff training, and 
collection of new data, testing, and transition processes. For some 
entities, new vendors may be needed for the creation and validation of 
the clinical documentation to be embedded in the attachment 
transactions. Systems implementation costs would account for most of 
the costs, with system testing alone likely accounting for a majority 
of costs for all covered entities. Ongoing operational costs would be 
expected to initially grow, as the implementation of electronic 
processes run in parallel with ongoing manual and partially automated 
processes, but to decline as higher proportions of transactions are 
automated. These HIT-related costs would be offset by significant 
reductions in labor costs for what are today largely manual processes 
to locate, collect, package, and mail clinical records needed to 
support requests for additional documentation to support claims and 
prior authorization requests. Other offsetting cost savings are 
expected from lower postage and other mailing costs, reductions in 
reprocessing volume due to higher clean claim acceptance rates, and 
delay in receiving payment.35 36
---------------------------------------------------------------------------

    \35\ NCVHS Letter to the Secretary of HHS on Recommendations for 
the Electronic Health Care Attachment Standard, July 5, 2016, 
https://ncvhs.hhs.gov/wp-content/uploads/2018/03/2016-Ltr-Attachments-July-1-Final-Chair-CLEAN-for-Submission-Publication.pdf.
    \36\ In a regulatory impact analysis that, in accordance with 
OMB Circular A-4, takes a society-wide perspective, changes in 
timing of payments represent a transfer, rather than a net societal 
cost savings.
---------------------------------------------------------------------------

    It is likely that there are significant differences in readiness 
among payer and provider claims and prior authorization HIT systems, 
and we do not know the extent of incremental costs associated with HIT 
development, enablement (upgrade or licensing fees paid by users), or 
workflow adjustment and training to facilitate compliance with the 
standards proposed in this rule. So, though we are aware that the net 
benefits would likely vary among stakeholders, we lack the data to 
estimate these differential effects. An important consideration 
reflected in various industry testimonies submitted to the NCVHS is 
that some stakeholders, particularly smaller providers, would continue 
to have the option to leverage existing clearinghouses to provide these 
information exchange services based on negotiated rates. This is a 
standard practice today, where clearinghouses already manage 90 percent 
of the conversion of paper-to-electronic formats, as well as 
reformatting of non-compliant to compliant electronic claim 
transactions for the industry. Given the high costs of manual and 
partially electronic means for exchanging required information, we 
believe the impact of this rule would be significant net savings to the 
industry. However, the level and timing of uptake (as opposed to the 
retention of manual processes and clearinghouse intermediation) by 
provider entities are uncertain. We reflect this uncertainty with both 
the phasing in of and the estimation of minimum and maximums for costs 
and benefits. We solicit comments on this approach and our assumptions 
throughout this analysis.
2. Explanation of Cost Calculations
    Based on consultation with industry workgroups, such as WEDI, we 
determined that the health care attachment standards in this proposed 
rule are already in common use by entities engaged in other lines of 
business, such as the workers' compensation and liability insurance

[[Page 78460]]

fields, that exchange medical records. Thus, there is clear evidence 
that the standards are fit for their intended purpose and have been 
successfully implemented in closely related business processes.
    Although the attachments standards we are proposing to adopt are 
initial standards, as described in section 1175 of the Act, health 
plans surveyed by CAQH in 2020 reported electronic transaction 
submission levels of 22 percent for attachments and 21 percent for 
prior authorizations. Therefore, while the specification for 
attachments requests by the health plan (X12 277) and the subsequent 
response from the provider (X12 276) have not previously been adopted 
under HIPAA Administrative Simplification, some payer and provider 
systems are already exchanging HIPAA electronic prior authorization 
transactions using the adopted standards. Moreover, the HL-7 C-CDA has 
been widely adopted pursuant to the ONC 2014 and 2015 Editions of 
Health Information Technology Certification Criteria specifying content 
exchange standards and implementation specifications for exchanging 
electronic health information. According to the latest available posted 
data, as of 2017, nearly 4 in 5 (80 percent) office-based physicians 
had adopted a certified EHR.\37\
---------------------------------------------------------------------------

    \37\ ONC Health IT Dashboard. Office-based Physician Electronic 
Health Record Adoption: https://dashboard.healthit.gov/quickstats/pages/physician-ehr-adoption-trends.php.
---------------------------------------------------------------------------

    Similarly, while the standards we are proposing to adopt for 
electronic signatures are also initial standards, we believe they have 
already been widely implemented by the industry. For example, in 2010 
the Drug Enforcement Agency (DEA) finalized a rule requiring similar 
standards for electronic prescribing of controlled substances.\38\ The 
proposed electronic signature standard utilizes the same technology to 
expand electronic signature capabilities to all clinical documentation, 
rather than just electronic prescriptions. Therefore, we believe the 
implementation of the proposed electronic signature standard would not 
represent a significant incremental cost to providers.
---------------------------------------------------------------------------

    \38\ Electronic Prescribing of Controlled Substances. Drug 
Enforcement Administration, Department of Justice, Office of 
Diversion Control website. http://www.deadiversion.usdoj.gov/ecomm/e_rx/.
---------------------------------------------------------------------------

    Given much of the industry has already implemented some or all of 
the implementation specifications we are proposing to adopt in this 
proposed rule, or versions of the implementation specifications we are 
proposing to adopt in this proposed rule, we believe the level of 
effort involved in implementing the entire set of proposed 
implementation specifications herein is more akin to implementing 
standards modifications than to implementing transactions standards for 
the first time. Therefore, we anchor our cost estimates on the final 
cost estimates, updated for inflation,\39\ in the Modifications final 
rule, and then make certain adjustments to address unique aspects of 
certain industry segments. While the systems required for implementing 
the specifications proposed for adoption in this proposed rule have 
been continuously updated since the publication of the Modifications 
final rule, the technologies within the proposed implementation 
specifications in this proposed rule are of the same type as those 
considered in the Modification rule and will be integrated into systems 
that continue to utilize the similar business models.
---------------------------------------------------------------------------

    \39\ Cost estimate ranges from the January 2009 Modifications 
final rule were adjusted for inflation using the Bureau of Labor 
Statistics Consumer Price Index Inflation Calculator, to reflect 
amounts for January 2020 and round up to the nearest whole number to 
match benefits estimates from the CAQH 2020 Index. https://www.bls.gov/data/inflation_calculator.htm.
---------------------------------------------------------------------------

    The cost estimates in the Modifications final rule were based on an 
estimate of the total costs to implement the initial HIPAA transaction 
standards (Version 4010/4010A) and informed by industry interviews.\40\ 
To determine the costs for each provider sub-segment (that is, 
hospitals, physicians, and dentists), we established an estimate for 
what the total approximate Version 4010/4010A costs were for an 
individual entity within that sub-segment (based on the interviews and 
other data available through research) and then applied an estimated 
range of 20 to 40 percent of those costs to come up with estimated 
minimum and maximum costs for Version 5010. The range was accepted as a 
realistic proxy by all providers and plans who participated in the 
interviews. Through the course of the interviews, we identified more 
granular cost categories and reviewed these with the participants to 
help analyze and validate overall cost estimates by entity. The 
estimated cost for each individual entity within a segment was then 
multiplied by the number of entities to establish the estimated costs 
for entire segment.
---------------------------------------------------------------------------

    \40\ Version 5010 Regulatory Impact Analysis--Supplement. 
September 2008. https://www.cms.gov/files/document/5010regulatoryimpactanalysissupplementpdf.
---------------------------------------------------------------------------

    With respect to the level and timing of the uptake of these 
standards, we assume that some portion of providers and their vendors 
may take longer to move from manual to fully automated transactions. 
For purposes of this analysis, we generally estimate that most 
stakeholders would incur costs over a 4-year period at the rate of 50 
percent in the first implementation year, 30 percent in the second 
implementation year, and 10 percent each in the third and fourth years.
    We note that, although many comments to the Modifications rule 
suggested we underestimated the costs, no substantive data or 
additional information was provided to counter our analysis at that 
time. We're not aware of more recent public research relating to costs 
of implementing modifications to HIPAA transaction standards. We invite 
public comments on our understanding and request any additional data 
that would help us determine more accurately the costs of implementing 
modifications to HIPAA transaction standards.
3. Explanation of Benefits Calculations
    To determine the benefits for each segment of the industry, we 
primarily relied upon the 2020 CAQH Index. Based on survey responses, 
CAQH estimates that spending on labor time conducting attachment 
transactions accounts for about $590 million of spending on 
administrative transactions across the medical industry, with health 
care providers incurring about 88 percent of this spending at an 
average cost of $5.10 for each manually processed attachment. In moving 
from manual to electronic attachments transactions, CAQH estimates the 
health care industry could save $4.09 on average per transaction and an 
additional $377 million annually. These estimated savings would be 
split between health care providers ($328 million) and health plans 
($49 million) and would be generated by the avoidance of 8 minutes in 
administrative labor time per attachment on average, as medical 
providers reported taking an average of 11 minutes to submit an 
attachment manually versus 3 minutes electronically. Comparable data on 
spending and savings opportunities on attachment transactions for 
dental providers were not available, although the survey reports that 
only 16 percent of dental attachment transactions in 2020 were fully 
electronic.
    The 2019 CAQH Index reported that the use of the electronic 
standard for prior authorizations has remained very low due to barriers 
such as provider

[[Page 78461]]

awareness, vendor support, and inconsistent use of data content allowed 
in the standard, and the lack of an attachment standard to support the 
exchange of medical documentation. The 2020 CAQH Index reports that 
fully electronic prior authorization continues to have the lowest 
adoption rate of the medical transactions surveyed, although 
utilization between 2019 and 2020 increased by 8 percentage points to 
21 percent. Since this rule proposes to adopt federal attachment 
standards, including those to address data content, we believe the 
proposed changes in this rule would substantially address these 
barriers and promote widespread adoption of electronic prior 
authorization processes. As described in section I.F. of this proposed 
rule, numerous organizations representing physician provider groups, 
insurance payers, health technology vendors, health care financial 
managers, and HIT standard advisory bodies have submitted 
recommendations to the Secretary strongly supporting this view.
    CAQH reports that prior authorization is the most costly and time-
consuming administrative transaction for providers, and administrative 
spending increased to $767 million as the cost to conduct prior 
authorizations rose for both plans and providers from the previous 
year. Based on survey responses, the 2020 CAQH Index estimates that, on 
average, providers spent about 20 minutes and $10.26 per transaction to 
conduct a prior authorization manually, and about 13 minutes and $7.07 
via a partially electronic web portal in 2020. These costs compare with 
an average cost of $3.64 per fully electronic transaction. CAQH 
estimates that, based on 2020 survey data, switching to fully 
electronic transactions could yield an additional $417 million in 
annual administrative cost savings. Those savings would be split 
between health care providers ($322 million or 77 percent) and health 
plans ($95 million or 23 percent). Comparable data were not reported on 
prior authorization transactions for dental providers, suggesting this 
transaction is not generally utilized by this segment.
    We utilize the CAQH national annual savings estimates as the basis 
for our benefits estimates. The CAQH national annual savings estimates 
are calculated based on potential savings moving from the reported 
state of 21 percent electronic processing for prior authorization 
transactions and 22 percent electronic processing for attachments to 
fully electronic processing. The total potential industry cost savings 
opportunity is an amount that declines as industry adoption increases. 
Although there was an apparent increase in electronic processing of 
prior authorization and health care attachments transactions from 2019 
to 2020, we do not trend the benefits estimates forward because 
previously reported estimates of electronic processing adoption have 
tended to remain stable over a longer period of time. The CAQH 
estimation methodology only includes labor time savings, which it 
assesses to be the most significant component of savings, by far. We do 
not include estimates of other sources of savings, such as through 
elimination of mailing costs, so our benefit estimates may have a 
tendency toward understating actual industry savings.\41\ Because we 
believe that some portion of providers and their vendors may take 
longer to move from manual to fully automated transactions, we also 
assume a phased-in realization of the level of annual benefits 
projected by CAQH. For purposes of this analysis, we generally estimate 
that most stakeholders would realize the benefits in labor savings over 
a 3-year period at the rate of 50 percent in the first operational 
year, 75 percent in the second operational year, and 100 percent in and 
after the third year after the compliance date.
---------------------------------------------------------------------------

    \41\ On the other hand, CAQH developed estimates from the 
experience of entities that voluntarily automated, and extrapolation 
from such voluntary experience to the regulatory context may 
generate a tendency toward overestimation of savings, on a per-unit 
basis and/or in the aggregate. We welcome comments that would 
facilitate refinement of estimates.
---------------------------------------------------------------------------

4. Hospitals
    As previously discussed, to determine the costs for each health 
care provider sub-segment, we started with the minimum and maximum cost 
estimates in the Modifications final rule for each type of entity. For 
hospitals, those estimates were within a range of $1,423 million to 
$2,848 million, adjusted for inflation (74 FR 3316). We further assume 
that these costs would be incurred by hospital HIT developers, which 
would both absorb some portion of the costs as a cost of doing business 
incorporated in the current level of HIT service and maintenance 
agreements and also pass some portion of the costs on to the hospital 
in the form of higher fees for enabling new functionality. This seems 
reasonable given our understanding that HIT vendors generally plan on, 
and finance, a certain level of ongoing system development through 
ongoing maintenance agreements, typically with annual increases, but 
also must keep these at a level that remains competitive in their niche 
market.\42\ In other words, not all possible systems upgrades would be 
factored into current fees. We do not have any information on how this 
allocation would be made and expect there would be many variations in 
practice, but for purposes of this analysis, we assume a 60/40 split 
between costs borne by the vendor and costs passed on to the hospital. 
As summarized in Table 4, this results in the hospital share of costs 
in the range of $569 million to $1,139 million, with the remainder in 
the range of $854 million to $1,709 million borne by hospital HIT 
vendors.
---------------------------------------------------------------------------

    \42\ The true cost of switching EHRs. May 30, 2018. Mary Pratt. 
Medical Economics Journal, June 10, 2018 edition, Volume 96, Issue 
10. https://www.medicaleconomics.com/view/true-cost-switching-ehrs.

                          Table 4--Attachments Costs Borne by Providers Versus Vendors
                                                 [$ in millions]
----------------------------------------------------------------------------------------------------------------
                                                           Proposed rule      Provider share      Vendor share
                      Entity type                            cost range           (40%)              (60%)
----------------------------------------------------------------------------------------------------------------
Physicians.............................................          665-1,329            266-532            399-797
Dentists...............................................            456-913            182-365            274-548
Hospitals..............................................        1,423-2,848          569-1,139          854-1,709
                                                        --------------------------------------------------------
    Subtotals..........................................        2,544-5,090        1,017-2,036        1,527-3,054
----------------------------------------------------------------------------------------------------------------


[[Page 78462]]

    To determine the benefits for hospitals, we refer to the estimates 
of savings for medical providers reported by CAQH, and assume that 
hospitals would achieve 20 percent of these savings. We assume a rough 
80/20 split between physicians and hospitals because we believe the 
vast majority of transactions needed to support claims and prior 
authorizations would come from clinician practices since plans and 
hospitals generally have other processes for utilization management of 
more expensive inpatient admissions and outpatient procedures. CAQH 
estimated the total annual savings opportunity for medical providers 
for fully automating attachments and prior authorization transactions 
to be $328 million and $322 million, respectively. So, we estimate the 
hospital share to be 20 percent of $650 million or $130 million. To 
reflect the uncertainty around the ultimate level of uptake of these 
standards, we estimate a range of 25 percent below this point estimate 
between $98 million to $130 million in annual savings, as summarized in 
Table 5.

                 Table 5--Attachments Benefits by Entity
                             [$ in millions]
------------------------------------------------------------------------
                                                              Estimated
                                                                annual
                        Entity type                            savings
                                                                range
                                                                (25%)
------------------------------------------------------------------------
Pharmacies.................................................          0-0
Vendors....................................................          0-0
Clearinghouses.............................................          0-0
Private Health Plans.......................................      108-144
Government Health Plans....................................      179-238
Physicians.................................................      390-520
Dentists...................................................       86-115
Hospitals..................................................       98-130
                                                            ------------
  Total....................................................    860-1,147
------------------------------------------------------------------------

    With respect to timing of costs and benefits, we assume hospitals 
would have both the capital and business interest to move promptly to 
achieve the return on investment; would incur all costs during the 2-
year implementation period; and would realize the full level of annual 
savings in and after the first operational year following the proposed 
compliance date, as summarized in Tables 8 and 9.
5. Physicians
    We followed a similar methodology for estimating physician costs 
and benefits. For physicians, the Modifications final rule cost 
estimates were within a range of $665 million to $1,329 million, 
adjusted for inflation (74 FR 3317). We assume a comparable level of 
effort to implement the proposed attachments standards. We further 
assume that these costs would be incurred by physician practice PMS and 
EHR vendors, who would both absorb some portion of the costs as a cost 
of doing business incorporated in the current level of HIT service and 
maintenance agreements and also pass some portion of the costs on to 
the practices in the form of higher fees for enabling new 
functionality. We again assume a 60/40 split between costs borne by the 
vendor and costs passed on to the customer. As summarized in Table 4, 
this results in a physician share of costs in the range of $266 million 
to $532 million, with the remainder in the range of $399 million to 
$797 million to be borne by physician PMS and EHR vendors. We further 
assume that some physician entities and their vendors may take more 
time to implement the standards while continuing to use manual 
processes in the meantime. Therefore, we estimate physician costs would 
be incurred over a 4-year period at the rate of 50 percent in the first 
implementation year, 30 percent in the second implementation year, and 
10 percent each in the third and fourth years, as summarized in Table 
8.
    To determine the benefits for physicians, we again referred to the 
estimates of savings for medical providers reported by CAQH and 
calculated the remaining 80 percent of these savings. CAQH estimated 
the total annual savings opportunity for medical providers for fully 
automating attachments and prior authorization transactions to be $328 
million and $322 million, respectively, or $650 million in total. So, 
we estimate the physician share to be 80 percent of $650 million, or 
$520 million. To reflect the uncertainty around the ultimate level of 
uptake of these standards, we estimate a range of 25 percent below this 
point estimate, or between $390 million to $520 million in annual 
savings, as summarized in Table 5. We further estimate that these 
benefits in labor savings would phase in over a 3-year period at the 
rate of 50 percent in the first operational year, 75 percent in the 
second operational year, and 100 percent in and after the third year 
after the compliance date, as summarized in Table 9.
6. Dentists
    For dentists, we follow the same methodology for costs as we do for 
physicians. The Modifications final rule cost estimates for dentists 
were within a range of $456 million to $913 million, adjusted for 
inflation (74 FR 3317). We assume a comparable level of effort to 
implement the proposed attachments standards. We further assume that 
these costs would be incurred by dental practice PMS and EHR vendors, 
who would both absorb some portion of the costs as a cost of doing 
business incorporated in the current level of HIT service and 
maintenance agreements and also pass some portion of the costs on to 
the dental practices in the form of higher fees for enabling new 
functionality. We again assume a 60/40 split between costs borne by the 
vendor and costs passed on the customer. As summarized in Table 4, this 
results in the dentist share of costs in the range of $182 million to 
$365 million, with the remainder in the range of $274 million to $548 
million borne by dental practice PMS and EHR vendors. As with 
physicians, we further assume that some dental practices and their 
vendors may take more time to implement the standards, while continuing 
to use manual processes in the meantime. Therefore, we estimate 
dentists' costs would be incurred over a 4-year period at the rate of 
50 percent in the first implementation year, 30 percent in the second 
implementation year, and 10 percent each in the third and fourth years, 
as summarized in Table 8.
    Given that the 2020 CAQH Index did not report on the potential 
savings opportunity for dental providers for full automation of 
attachments transactions, we take a different approach to benefits 
estimation. Comments included in testimony submitted to the NCVHS in 
2016 on the Attachment Standard \43\ (2016 NCVHS Hearing) indicated 
that dentists supported the proposal to make the X12N 275 transaction 
the standard vehicle for transporting attachment content to dental 
claims, but made no mention of the prior authorization transaction. 
These comments also indicated that many dental PMS vendor technologies 
may lack the capability to generate HL7 documents, requiring dentists 
to either upgrade existing systems or find alternative methods, such as 
using a clearinghouse or payer portals. Thus, we conclude that some 
dentists and their PMS vendors would incur costs associated with 
submitting attachment information to support claims, and others may 
maintain current manual or clearinghouse-mediated processes. Therefore, 
we assume that the savings opportunity for full automation of claims 
attachments for

[[Page 78463]]

dentists would be a portion of the savings opportunity for medical 
providers. Since the total number of dental entities (125,329) is about 
70 percent of the number of other provider entities (177,266, or 5,544 
hospital establishments and 171,722 physician firms), we estimate their 
savings opportunity would be no greater than 70 percent of the annual 
$328 million medical provider savings opportunity for attachments 
estimated by CAQH. In addition, we assume that, given the relatively 
smaller size of dental practices, a greater proportion of dentists than 
physicians may choose to retain manual processes. So, as summarized in 
Table 5, we estimate that the annual dentist savings opportunity is 50 
percent of 70 percent of the medical provider opportunity, or $115 
million (328 x 0.70 x 0.50). To reflect the uncertainty around the 
ultimate level of uptake of these standards, we estimate a range of 25 
percent below this point estimate, or between $86 million to $115 
million in annual savings. As with the physician estimates, we further 
estimate that these benefits in labor savings would phase in over a 3-
year period at the rate of 50 percent in the first operational year, 75 
percent in the second operational year, and 100 percent in and after 
the third year after the compliance date, as summarized in Table 9.
---------------------------------------------------------------------------

    \43\ NCVHS Subcommittee on Standards. Agenda of the February 16, 
2016 NCVHS Subcommittee on Standards Hearing https://ncvhs.hhs.gov/meetings/agenda-of-the-february-16-2016-ncvhs-subcommittee-on-standards-hearing/.
---------------------------------------------------------------------------

7. PMS and EHR Vendors
    In testimony to the 2016 NCVHS Hearing, WEDI noted that the 
functionality that would be new to providers in implementing the 
attachment standards would consist of automating EHR systems to 
exchange data with the PMS and digital signatures. Consistent with this 
assessment, the 2016 MITRE environmental scan found that many EHR 
vendors had the capability of sending X12N 275 and X12N 278 EDI 
transactions, but that substantial work remained to routinely and 
reliably extract structured clinical data for C-CDA attachments. Since 
that time there has been both growth and consolidation in these 
industry segments. A health care provider entity's PMS and EHR systems 
may be bundled in one product offering, semi-integrated affiliated 
systems, or entirely independent systems offered by separate 
vendors.\44\ So, readiness would vary widely for provider entities 
based on their HIT contractors.
---------------------------------------------------------------------------

    \44\ The true cost of switching EHRs. May 30, 2018. Mary Pratt. 
Medical Economics Journal, June 10, 2018 edition, Volume 96, Issue 
10. https://www.medicaleconomics.com/view/true-cost-switching-ehrs.
---------------------------------------------------------------------------

    Because vendors of certified electronic health record technology 
are already familiar with CDA for meeting requirements under the ONC 
Health IT Certification Program, we believe all EHR vendors have some 
ability to extract data for C-CDA templates, although all may not have 
fully implemented or provided this functionality as part of core 
product offerings. A review of some of the largest EHR vendor websites 
in May 2021, provided informal evidence suggesting that about 80 
percent of vendors had this functionality in place, that another 17 
percent had at least partial functionality, and that only 3 percent 
might still have no C-CDA functionality. The many other smaller EHR 
vendors are also likely in varying stages of readiness. Thus, we assume 
that additional implementation costs may be needed to reliably extract 
C-CDA documentation and to either integrate this content into internal 
EDI processes or exchange the documentation with another PMS.
    Similarly, we assume PMS vendors contracted with clients that have 
a certified EHR have already largely developed the ability to create 
the X12N 275 and X12N 278, even if this functionality has not been 
enabled for all customers, and that the majority of the additional cost 
would be associated with receiving and managing the C-CDA payload. 
Because of this pre-existing functionality, we are again persuaded that 
implementing these proposals is more akin to a standards upgrade than 
implementing a new standard for the first time. Based on 2020 CAQH 
Index results that report 22 percent of medical and 16 percent of 
dental attachment exchanges occurring electronically, we are aware that 
some provider vendors have already successfully implemented the 
transmission of electronic attachments. Without data on the extent of 
the gaps, or on the difference in readiness between EHR and PMS 
vendors, we assume similar costs across both types of vendors and treat 
them together. We also assume that other significant components of 
implementation costs would consist of trading partner testing and user 
training.
    As the result of the estimates already described for hospitals, 
physicians, and dentists and the split with their HIT vendors in Table 
4, we estimate that PMS and EHR vendor costs would add up across all 
customer segments to a range of $1,527 to 3,054 million. And since we 
assume some vendors and/or their customers may take more time to 
implement the standards, we estimate vendors' costs would be incurred 
over a 4-year period at the rate of 50 percent in the first 
implementation year, 30 percent in the second implementation year, and 
10 percent each in the third and fourth years, as summarized in Table 
8.
    We have not identified any evidence that suggests there would be 
savings for this segment as the result of the changes in this proposed 
rule and do not include any estimates of benefits for this segment.
8. Clearinghouses
    From remarks recorded at the 2016 NCVHS Hearing,\45\ we understand 
that by 2016 many entities in the clearinghouse industry had already 
fully implemented the standards proposed in this rule and were 
exchanging the transactions and clinical payloads with government and 
commercial health care entities, as well as with entities in other 
lines of business. Fundamental to the clearinghouse business role is 
the ability to normalize disparate data formats, including both 
structured and unstructured clinical data, and unwrap and convert the 
data into standard or proprietary formats based on the varying 
capabilities and needs of payer and provider clients. We assume that, 
by 2022, this ability has generally become the business norm throughout 
the clearinghouse industry. As a result, we assume that clearinghouses 
would not have significant new technology development costs as the 
result of our proposals, but would have significant new trading partner 
testing costs.
---------------------------------------------------------------------------

    \45\ Transcript of the February 16, 2016 NCVHS Subcommittee on 
Standards https://ncvhs.hhs.gov/transcripts-minutes/transcript-of-the-february-16-2016-ncvhs-subcommittee-on-standards/.
---------------------------------------------------------------------------

    To estimate clearinghouse implementation costs, we considered a 
commenter, described in the Modifications final rule (74 FR 3318), that 
identified as a large clearinghouse and reported that projected costs 
would be at least $3.5 million, $4.3 adjusted for inflation, and would 
be affected specifically by the amount of testing that would be 
required with trading partners--both providers and health plans. On the 
basis of this data point, as summarized in Table 6, we estimate that 23 
large clearinghouse entities would incur $4.3 million in implementation 
costs, and that the remainder of 139 smaller clearinghouses would incur 
$1.8 million, for a segment total of $349 million. To reflect the 
uncertainty around these projections, we estimate a range of 25 percent 
below and above this point estimate of between $262

[[Page 78464]]

million to $436 million in total costs. And since we assume some 
customers may take more time to implement the standards, we estimate 
clearinghouse costs would be incurred over a 4-year period at the rate 
of 50 percent in the first implementation year, 30 percent in the 
second implementation year, and 10 percent each in the third and fourth 
years, as summarized in Table 8.
    We have not identified any evidence that suggests there would be 
savings for clearinghouses as the result of the changes in this 
proposed rule and have not estimated any benefits for this segment.

                                          Table 6--Clearinghouse Costs
----------------------------------------------------------------------------------------------------------------
                            Firm size                                  Large           Small           Total
----------------------------------------------------------------------------------------------------------------
Firms (#).......................................................              23             139             162
Cost per Firm ($ million).......................................             4.3             1.8  ..............
Total Segment Cost ($ million)..................................              99             250             349
Cost Range  25% ($ million).........................  ..............  ..............         262-436
----------------------------------------------------------------------------------------------------------------

9. Private Health Plans and Issuers
    Based on our informal web searches in May 2021, for plan websites 
that include EDI instructions for providers on submitting X12N 275 and 
X12N 278 transactions, and the general absence of comments describing 
significant implementation burden in testimony submitted to the 2016 
NCVHS Hearing, we believe health plans (or their clearinghouses) have 
generally already implemented the technology for these proposed 
changes. We believe health plans (or their clearinghouses) have already 
implemented both the X12N transactions and have processes for 
collecting at least unstructured medical record data currently used for 
auditing, risk coding validation, and other quality and utilization 
management processes. CAQH reports that 22 percent of medical and 16 
percent of dental attachment exchanges were occurring electronically in 
2020. In addition, we are aware that all health plans routinely collect 
medical record documentation from providers in a variety of ways, 
including through web portals and direct access to EHRs.\46\ These 
facts suggest to us that health plans have either already automated 
these processes or have workarounds to manage the receipt of this 
information. Thus, we believe the additional effort associated with 
implementing our proposals may be limited to mapping existing backend 
processes to the new transaction processing front-end systems. 
Alternatively, the smaller the health plan, the more likely that entity 
may rely upon a clearinghouse for administrative and clinical data 
exchange and the more likely the status quo would continue.
---------------------------------------------------------------------------

    \46\ For example, see: Payer Access to EHRs: What Providers Need 
to Know. Journal of AHIMA. October 9, 2019 https://journal.ahima.org/page/payer-access-to-ehrs-what-providers-need-to-know.
---------------------------------------------------------------------------

    In testimony to the 2016 NCVHS Hearing, WEDI noted that the 
functionality that would be new to payers in implementing the 
attachment standards would be the HL7 CDA, LOINC codes, and other 
transport models requiring different skill sets than EDI. Although 
payers routinely collect medical record documentation today, this does 
not necessarily mean that the ingestion, interpretation, and 
integration of clinical data is fully automated. However, we do not see 
evidence in testimony or public comments that plans anticipate a 
significant implementation effort related to additional technology 
development to handle the HL7 CDA and LOINC codes required by federal 
adoption of attachment standards. It is possible, given payer 
involvement with the rapid evolution of clinical data exchange 
standards, that health plans may not be incentivized to significantly 
enhance their current state of C-CDA handling, and may instead continue 
to rely on current state processes, including the use of clearinghouses 
for intermediation where necessary.\47\ For these reasons, we do not 
believe health plans would bear as significant a level of investment 
for system development for these proposals as they did for the 
requirements of the Modifications final rule. However, they would 
likely incur implementation costs for trading partner testing if they 
exchange these transactions directly with providers in lieu of via 
clearinghouses.
---------------------------------------------------------------------------

    \47\ A Path Toward Further Clinical and Administrative Data 
Integration. Final Report Of The Health Information Technology 
Advisory Committee's Intersection of Clinical And Administrative 
Data Task Force To The National Coordinator For Health Information 
Technology. November 17, 2020 https://www.healthit.gov/sites/default/files/page/2020-11/2020-11-17_ICAD_TF_FINAL_Report_HITAC.pdf.
---------------------------------------------------------------------------

    In light of these considerations, we assume that the costs of 
implementation for health plans may be somewhat analogous to those for 
clearinghouses, but generally with fewer connections to test, since 
many transactions would be expected to continue to be exchanged through 
existing clearinghouse connections. Therefore, as summarized in Table 
7, we estimate that private health plans would incur 50 percent of 
clearinghouse costs, and we increase that estimated range of $262 
million to $436 million to reflect 4.8 times as many health plan 
entities (772/162 = 4.8). Thus, we estimate private health plans would 
incur implementation costs, driven mostly by trading partner testing, 
of $838 million (349 x 0.50 x 4.8). To reflect the uncertainty around 
these projections, we estimate a range of 25 percent below and above 
this point estimate of between $629 million to $1,048 million.

                   Table 7--Private Health Plan Costs
------------------------------------------------------------------------
            Entity type               Clearinghouses     Private plans
------------------------------------------------------------------------
Firms (#).........................                162                772
Difference in # of Firms..........  .................                4.8
Total cost from Table 6 ($ in                     349  .................
 millions)........................
Plan cost (50% of above x multiple  .................                838
 of firms) ($ in millions)........
Cost Range  25% ($ in   .................          629-1,048
 millions)........................
------------------------------------------------------------------------


[[Page 78465]]

    Given that we assume some portion of providers and their vendors 
may take longer to move from manual to fully automated transactions, we 
assume health plan testing costs would extend beyond the 2-year 
implementation period. So, for purposes of this analysis, we estimate 
that private health plans would incur costs over a 4-year period at the 
rate of 50 percent in the first implementation year, 30 percent in the 
second implementation year, and 10 percent each in the third and fourth 
years.
    In estimating the benefits of the proposed rule for private health 
plans, we again referred to the estimates of savings reported by CAQH, 
but this time to those reported for plans. CAQH estimated the 2020 
national annual plan savings opportunities for attachments and prior 
authorizations at $49 million and $95 million, respectively, for a 
total of $144 million annually. To reflect the uncertainty around the 
ultimate level of uptake of these standards, we estimate a range of 25 
percent below this point estimate between $108 million to $144 million 
in annual savings. We further assume plans would realize the benefits 
in labor savings over a 3-year period at the rate of 50 percent in the 
first operational year, 75 percent in the second operational year, and 
100 percent in and after the third year after the compliance date, as 
summarized in Table 9.
10. Government Health Plans
    Similar to private health plans, we believe Medicare, Medicaid, and 
the Veteran's Administration systems have largely implemented the 
ability to receive and manage these transactions through their HIT 
processing vendors and contracted managed care plans, especially with 
respect to claims attachments, and would incur costs in rough magnitude 
to the impacts estimated in the Modifications final rule for testing 
and training. We assume these costs would again largely be borne by the 
contracted vendors under existing contractual terms and agreements. 
Accordingly, to calculate government health plan costs, we used the 
same range of costs estimated in the Modifications final rule of $384 
million to $734 million (74 FR 3318), adjusted for inflation. As we do 
with providers and private health plans, we further assume that costs 
would be incurred over a 4-year period. As summarized in Table 8, we 
estimate costs would be incurred at the rate of 50 percent in the first 
implementation year, 30 percent in the second implementation year, and 
10 percent each in the third and fourth years.
    To calculate government health plan benefits, we started with the 
point estimate of $238 million savings due to the use of better 
standards in the Modifications final rule (74 FR 3318). To reflect the 
uncertainty around the ultimate level of uptake of these standards, we 
estimate a range of 25 percent below this point estimate or between 
$179 million to $238 million in annual savings. As with other industry 
segments, and as summarized in Table 9, we further assume government 
health plans would realize the benefits in these savings over a 3-year 
period at the rate of 50 percent in the first operational year, 75 
percent in the second operational year, and 100 percent in and after 
the third year after the compliance date.
11. Pharmacies
    We believe pharmacies would generally not be impacted by the 
changes in this proposed rule. Comments from NCPDP submitted to the 
2016 NCVHS Hearing indicated: that pharmacies use the X12N 837 to bill 
medications and supplies covered under the Medicare Part B program and 
for professional pharmacy services covered under a medical plan; the 
type of claims submitted by pharmacy providers using the X12N 837 
rarely requires an attachment; the electronic prior authorization (ePA) 
transactions approved as part of the NCPDP SCRIPT standard in 2013 
address the documentation needs around prior authorization attachments; 
and that while the ePA transactions do accommodate attachments, NCPDP 
was not aware of any organization using a HL7 C-CDA attachment for 
pharmacy prior authorizations. In addition, contextual comments 
submitted by NCPDP to the NCVHS in 2020 in response to a Request for 
Comments on CAQH CORE Operating Rules \48\ indicated there is very 
little use in the pharmacy industry of the X12N 278 transaction. As a 
result, we assume pharmacies would be affected by these proposals only 
rarely to support the billing of retail pharmacy supplies and 
professional services claims. Based on an NCPDP whitepaper, we further 
understand that a pharmacy needing to send attachment information to 
support an X12N 837 claim would generally be expected to employ 
existing batch processes to send attachment information to the same 
clearinghouse that converts their NCPDP billing transactions to X12 837 
Professional Claims for formatting and transmittal in the X12N 275.\49\ 
Therefore, we assume the proposed changes to information exchanges 
between clearinghouses and health plans would continue to be managed by 
clearinghouses that serve this particular market. As a result, we 
conclude that pharmacies would generally not be affected by this 
proposed rule, and we estimate no costs and benefits for this segment.
---------------------------------------------------------------------------

    \48\ NCVHS Subcommittee on Standards, Comments Received in 
Response to Request for Comment (Federal Register Notice 85 FR 
37666] (on CAQH CORE Operating Rules) August 20, 2020 https://ncvhs.hhs.gov/wp-content/uploads/2020/08/Comments-CAQH%20CORE%20Proposed%20Operating%20Rules%20for%20Federal%20Adoption%20508.pdf.
    \49\ NCPDP White Paper on Pharmacy Professional Service Billing 
https://www.ncpdp.org/NCPDP/media/pdf/WhitePaper/Billing-Guidance-for-Pharmacists-Professional-and-Patient-Care-Services-White-Paper.pdf?ext=.pdf.
---------------------------------------------------------------------------

12. Summary of Costs and Benefits for This Proposed Rule
    Tables 8 and 9 are the compilation of the estimated costs and 
benefits for all of the standards proposed in this proposed rule.

                       Table 8--Estimated Minimum and Maximum Costs for Implementation of Attachment Standards--2025 Through 2034
                                                                     [$ in millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                     Industry                        2025     2026     2027     2028     2029     2030     2031     2032     2033     2034      Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hospitals minimum................................    284.5    284.5  .......  .......  .......  .......  .......  .......  .......  .......          569
Hospital maximum.................................    569.5    569.5  .......  .......  .......  .......  .......  .......  .......  .......     1,1395.0
Physicians minimum...............................    133.0     79.8     26.6     26.6  .......  .......  .......  .......  .......  .......        266.0
Physicians maximum...............................      266    159.6     53.2     53.2  .......  .......  .......  .......  .......  .......        532.0
Dentists minimum.................................       91     54.6     18.2     18.2  .......  .......  .......  .......  .......  .......        182.0
Dentists maximum.................................    182.5    109.5     36.5     36.5  .......  .......  .......  .......  .......  .......        365.0
Pharmacies minimum...............................      0.0      0.0      0.0      0.0  .......  .......  .......  .......  .......  .......          0.0
Pharmacies maximum...............................      0.0      0.0      0.0      0.0  .......  .......  .......  .......  .......  .......          0.0

[[Page 78466]]

 
Private Health Plans minimum.....................    314.5    188.7     62.9     62.9  .......  .......  .......  .......  .......  .......        629.0
Private Health Plans maximum.....................      524    314.4    104.8    104.8  .......  .......  .......  .......  .......  .......      1,048.0
Government Health Plans minimum..................    192.0    115.2     38.4     38.4  .......  .......  .......  .......  .......  .......        384.0
Government Health Plans maximum..................      367    220.2     73.4     73.4  .......  .......  .......  .......  .......  .......        734.0
Clearinghouses minimum...........................      131     78.6     26.2     26.2  .......  .......  .......  .......  .......  .......        262.0
Clearinghouses maximum...........................      218    130.8     43.6     43.6  .......  .......  .......  .......  .......  .......        436.0
Vendors minimum..................................    763.5    458.1    152.7    152.7  .......  .......  .......  .......  .......  .......      1,527.0
Vendors maximum..................................    1,527    916.2    305.4    305.4  .......  .......  .......  .......  .......  .......      3,054.0
                                                  ------------------------------------------------------------------------------------------------------
    Total Minimums...............................    1,910    1,260      325      235      0.0      0.0      0.0      0.0      0.0      0.0      3,819.0
    Total Maximums...............................    3,654  2,420.2    616.9    616.9      0.0      0.0      0.0      0.0      0.0      0.0      7,308.0
--------------------------------------------------------------------------------------------------------------------------------------------------------


                      Table 9--Estimated Minimum and Maximum Benefits for Implementation of Attachment Standards--2025 Through 2034
                                                                     [$ in millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                       Industry                          2025     2026     2027     2028     2029     2030     2031     2032     2033     2034    Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hospitals minimum....................................      0.0      0.0     97.5     97.5     97.5     97.5     97.5     97.5     97.5     97.5    780.0
Hospital maximum.....................................      0.0      0.0    130.0    130.0    130.0    130.0    130.0    130.0    130.0    130.0  1,040.0
Physicians minimum...................................      0.0      0.0    195.0    292.5    390.0    390.0    390.0    390.0    390.0    390.0  2,827.5
Physicians maximum...................................      0.0      0.0    260.0    390.0    520.0    520.0    520.0    520.0    520.0    520.0  3,770.0
Dentists minimum.....................................      0.0      0.0       43     64.6     86.1     86.1     86.1     86.1     86.1     86.1    624.2
Dentists maximum.....................................      0.0      0.0     57.5     86.3    115.0    115.0    115.0    115.0    115.0    115.0    833.8
Pharmacies minimum...................................      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0
Pharmacies maximum...................................      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0
Private Health Plans minimum.........................      0.0      0.0     54.0     81.0    108.0    108.0    108.0    108.0    108.0    108.0    783.0
Private Health Plans maximum.........................      0.0      0.0     72.0    108.0    144.0    144.0    144.0    144.0    144.0    144.0  1,044.0
Government Health Plans minimum......................      0.0      0.0     89.3    133.9    178.5    178.5    178.5    178.5    178.5    178.5  1,294.2
Government Health Plans maximum......................      0.0      0.0    119.0    178.5    238.0    238.0    238.0    238.0    238.0    238.0  1,725.5
Clearinghouse minimum................................      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0
Clearinghouse maximum................................      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0
Vendors minimum......................................      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0
Vendors maximum......................................      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0      0.0
                                                      --------------------------------------------------------------------------------------------------
    Total Minimums...................................      0.0      0.0    478.8    669.5    860.1    860.1    860.1    860.1    860.1    860.1  6,308.9
    Total Maximums...................................      0.0      0.0    638.5    892.8  1,147.0  1,147.0  1,147.0  1,147.0  1,147.0  1,147.0  8,413.3
--------------------------------------------------------------------------------------------------------------------------------------------------------

E. Regulatory Review Costs Estimate

    One of the costs of compliance with a proposed rule is the 
necessity for affected entities to review the rule in order to 
understand what it requires and what changes the entity would have to 
make to come into compliance. We assume that 323,766 affected entities 
(listed in Table 2) would incur some of these costs, as they are the 
entities that would have to implement the proposed changes. The 
particular staff involved in such a review would vary from entity to 
entity, but would generally consist of lawyers responsible for 
compliance activities (at all 323,766 entities) and individuals 
familiar with the technical X12N and HL7 standards at the level of a 
computer and information systems manager at private and government 
health plans, clearinghouses, and PMS and EHR vendors (a total of 1,937 
entities). Using the Occupational Employment and Wages for May 2020 
from the Bureau of Labor Statistics for lawyers (Code 23-1011) and 
computer and information system managers (Code 11-3021), we estimate 
that the national average labor costs of reviewing this rule are $100 
and $109 per hour, respectively, including overhead and fringe 
benefits. We estimate that it would take approximately 2 hours for each 
staff person involved to review this proposed rule and its relevant 
sections and that, on average, one lawyer and two computer and 
information manager-level staff persons would engage in this review. 
For each entity that reviews the rule, the estimated costs are 
therefore $200 for lawyers, or $64.8 million (2 hours each x 1 staff x 
$100 x 323,766) for all affected entities. For each plan, 
clearinghouse, and PMS or EHR vendor, the estimated costs are therefore 
$436 for information system managers, or $0.8 million (2 hours each x 2 
staff x $109 x 1,937) in total. Therefore, we estimate that the total 
cost of reviewing this rule is $65.6 million ($64.8 + 0.8 million).

F. Accounting Statement

    Whenever a rule is considered a significant rule under Executive 
Order 12866, we are required to develop an Accounting Statement. This 
statement must state that we have prepared an accounting statement 
showing the classification of the expenditures associated with the 
provisions of this proposed rule. Monetary annualized benefits and non-
budgetary costs are presented using 3 percent and 7 percent discount 
rates.

[[Page 78467]]



 Table 10--Accounting Statement--Accounting Statement: Classification of Estimated Expenditures, From FY 2025 to
                                                     FY 2034
                                                 [$ in millions]
----------------------------------------------------------------------------------------------------------------
           Category              Primary estimate    Minimum  estimate     Maximum  estimate         Source
----------------------------------------------------------------------------------------------------------------
                                                    Benefits
----------------------------------------------------------------------------------------------------------------
Annualized monetized benefits:
    7% Discount...............  670..............  574.................  765.................  RIA.
    3% Discount...............  708..............  606.................  809.................  RIA.
Qualitative (un-quantified      Increased
 benefits).                      productivity due
                                 to decrease in
                                 manual
                                 processing;
                                 reduced delays
                                 in patient care.
----------------------------------------------------------------------------------------------------------------
Providers and health plans would benefit from efficiencies in resource use stemming from changes implemented by
 plans, clearinghouses, and vendors.
----------------------------------------------------------------------------------------------------------------
                                                      Costs
----------------------------------------------------------------------------------------------------------------
Annualized monetized costs:
    7% Discount...............  700..............  474.................  926.................  RIA.
    3% Discount...............  615..............  416.................  814.................  RIA.
Qualitative (un-quantified      None.............
 costs).
----------------------------------------------------------------------------------------------------------------
Providers, health plans, and government plans would pay for IT staff and other contractors, as well as
 clearinghouses and vendors for changes in the forms of new and ongoing fees.
----------------------------------------------------------------------------------------------------------------
                                                    Transfers
----------------------------------------------------------------------------------------------------------------
Annualized monetized            None.............  None................  None................
 transfers: ``on budget''.
Annualized monetized            None.............  None................  None................
 transfers: ``off budget''.
----------------------------------------------------------------------------------------------------------------

VI. Response to Comments

    Because of the large number of public comments, we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble, 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

List of Subjects

45 CFR Part 160

    Administrative practice and procedure, Computer technology, Health 
care, Health facilities, Health insurance, Health records, Hospitals, 
Medicaid, Medicare, Penalties, Reporting and recordkeeping 
requirements.

45 CFR Part 162

    Administrative practice and procedures, electronic transactions, 
health facilities, health insurance, hospitals, incorporation by 
reference, Medicaid, Medicare, Reporting and recordkeeping 
requirements.

    For the reasons set forth in this preamble, the Department of 
Health and Human Services proposed to amend 45 CFR subchapter C to read 
as follows:

PART 160--GENERAL ADMINISTRATIVE REQUIREMENTS

0
1. The authority citation for part 160 continues to read as follows:

    Authority:  42 U.S.C. 1302(a), 42 U.S.C. 1320d-1320d-8, sec. 264 
of Pub. L. 104 191, 110 Stat. 2033-2034 (42 U.S.C. 1320d-2 (note)), 
5 U.S.C. 552; secs. 13400 and 13424, Pub. L. 111-5, 123 Stat. 258-
279, and sec. 1104 of Pub. L. 111-148, 124 Stat. 146-154.


Sec.  160.103   [Amended]

0
2. In Sec.  160.103, paragraph (10) of the definition of 
``Transaction'' is amended by removing the word ``claims'' and adding 
in its place the word ``care''.

PART 162--ADMINISTRATIVE REQUIREMENTS

0
3. The authority citation for part 162 continues to read as follows:

    Authority:  42 U.S.C. 1320d--1320d-9 and secs. 1104 and 10109 of 
Pub. L. 111-148, 124 Stat. 146-154 and 915-917.

0
4. Section 162.103 is amended by adding the definitions of ``Attachment 
information'' and ``Electronic signature'' to read as follows:


Sec.  162.103   Definitions.

* * * * *
    Attachment information means documentation that enables the health 
plan to make a decision about health care that is not included in 
either of the following:
    (1) A health care claims or equivalent encounter information 
transaction, as described in Sec.  162.1101.
    (2) A referral certification and authorization transaction, as 
described in Sec.  162.1301(a) and the portion of Sec.  162.1301(c) 
that pertains to authorization.
* * * * *
    Electronic signature means an electronic sound, symbol, or process, 
attached to or logically associated with attachment information and 
executed by a person with the intent to sign the attachment 
information.
* * * * *
0
5. Section 162.920 is amended by:
0
a. Revising the introductory text and paragraph (a) introductory text; 
and
0
b. Adding paragraphs (a)(19) through (22) and (e).
    The revisions and additions read as follows:


Sec.  162.920  Availability of implementation specifications and 
operating rules.

    Certain material is incorporated by reference into this part with 
the approval of the Director of the Federal Register under 5 U.S.C. 
552(a) and 1 CFR part 51. To enforce any edition other than that 
specified in this section, the Department of Health and Human Services 
must publish a document in

[[Page 78468]]

the Federal Register and the material must be available to the public. 
All approved incorporation by reference (IBR) material is available for 
inspection at the Centers for Medicaid & Medicare Services (CMS) and 
the National Archives and Records Administration (NARA). Contact CMS 
at: 7500 Security Boulevard, Baltimore, Maryland 21244; 
[email protected]; (410) 786-6597. For 
information on the availability of this material at NARA, visit 
www.archives.gov/federal-register/cfr/ibr-locations.html or email 
[email protected]. The material may be obtained from the following 
source(s):
    (a) ASC X12, 7600 Leesburg Pike, Suite 430, Falls Church, VA 22043; 
Telephone (703) 970-4480; FAX (703) 970-4488; https://www.X12.org.
    (19) The X12N 275--Additional Information to Support a Health Care 
Claim or Encounter (006020X314), September 2014; IBR approved for Sec.  
162.2002(d).
    (20) The X12N 275--Additional Information to Support a Health Care 
Services Review (006020X316), August 2021; IBR approved for Sec.  
162.2002(c).
    (21) The X12N 277--Health Care Claim Request for Additional 
Information (006020X313), September 2014; IBR approved for Sec.  
162.2002(e).
    (22) The X12N 278--Health Care Services Request for Review and 
Response (006020X315), September 2014; IBR approved for Sec.  
162.1302(e).
* * * * *
    (e) Health Level Seven International (HL-7), 3300 Washtenaw Avenue, 
Suite 227, Ann Arbor, MI 48104; Telephone (734) 677-7777; FAX (734) 
677-6622; www.hl7.org.
    (1) HL7 CDA R2 Attachment Implementation Guide: Exchange of C-CDA 
Based Documents, Release 1--March 2017; IBR approved for Sec.  
162.2002(a).
    (2) HL7 Implementation Guide for CDA Release 2: Consolidated CDA 
Templates for Clinical Notes (US Realm) Draft Standard for Trial Use 
Release 2.1, Volume 1--Introductory Material, June 2019 with Errata; 
IBR approved for Sec.  162.2002(b).
    (3) HL7 Implementation Guide for CDA Release 2: Consolidated CDA 
Templates for Clinical Notes (US Realm) Draft Standard for Trial Use 
Release 2.1, Volume 2--Templates and Supporting Material, June 2019 
with Errata; IBR approved for Sec.  162.2002(b).
0
6. Section 162.1302 is amended--
0
a. In paragraph (c), by removing the phrase ``standards identified in 
paragraph (b)(2)'' and adding in its place the phrase ``standard 
identified in paragraph (b)(2)(i)''; and
0
b. By adding paragraph (e).
    The addition reads as follows:


Sec.  162.1302   Standards for referral certification and prior 
authorization transaction.

* * * * *
    (e) For the period from January 1, 2012--
    (1) Through [24 months from effective date of the final rule], the 
standard identified in paragraph (b)(2)(ii) of this section;
    (2) On and after [24 months from the effective date of the final 
rule], the X12N 278--Health Care Services Request for Review and 
Response (006020X315) (incorporated by reference, see Sec.  162.920).
0
7. Add subpart T, consisting of Sec. Sec.  162.2001 and 162.2002 to 
read as follows:
Subpart T--Health Care Attachments
Sec.
162.2001 Health care attachments transaction.
162.2002 Standards for health care attachments transaction.

Subpart T--Health Care Attachments


Sec.  162.2001   Health care attachments transaction.

    A health care attachments transaction is the transmission of any of 
the following:
    (a) Attachment information from a health care provider to a health 
plan for any of the following purposes:
    (1) In support of a referral certification and authorization 
transaction, as described in Sec.  162.1301(a).
    (2) In support of a health care claims or equivalent encounter 
transaction, as described in Sec.  162.1101.
    (b) A request from a health plan to a health care provider for 
attachment information.


Sec.  162.2002  Standards for health care attachments transaction.

    The Secretary adopts the following standards for the period on and 
after [24 months from effective date of the final rule]:
    (a) For transmissions described in Sec.  162.2001, HL7 CDA R2: 
Attachment Implementation Guide: Exchange of C-CDA Based Documents, 
Release 1--March 2017 (incorporated by reference, see Sec.  162.920).
    (b) For transmissions described in Sec.  162.2001(a) --
    (1) HL7 Implementation Guide for CDA Release 2: Consolidated CDA 
Templates for Clinical Notes (US Realm) Draft Standard for Trial Use 
Release 2.1, Volume 1--Introductory Material, June 2019 with Errata 
(incorporated by reference, see Sec.  162.920)
    (2) HL7 Implementation Guide for CDA Release 2: Consolidated CDA 
Templates for Clinical Notes (US Realm) Draft Standard for Trial Use 
Release 2.1, Volume 2 -- Templates and Supporting Material, June 2019 
with Errata (incorporated by reference, see Sec.  162.920).
    (c) For transmissions described in Sec.  162.2001(a)(1), the X12N 
275 Additional Information to Support a Health Care Services Review 
(06020X316).
    (d) For transmissions described in Sec.  162.2001(a)(2), the X12N 
275 Additional Information to Support a Health Care Claim or Encounter 
(06020X314).
    (e) For transmissions described in the following:
    (1) Section 162.2001(b) that pertain to Sec.  162.2001(a)(2) 
transmissions, the X12N 277--Health Care Claim Request for Additional 
Information (006020X313) (incorporated by reference, see Sec.  
162.920).
    (2) Section 162.2001(b) that pertain to Sec.  162.2001(a)(1) 
transmissions, the standard specified in 45 CFR 1302(e)(2).

    Dated: December 14, 2022.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2022-27437 Filed 12-15-22; 4:15 pm]
BILLING CODE 4150-28-P