What is the Administrative Simplification Compliance Act?
The Administrative Simplification Compliance Act is an Act passed in 2001 that requires healthcare providers and medical equipment suppliers to submit claims for payment to Medicare electronically. Noncompliance with the requirement will result in nonpayment and possible exclusion from Medicare unless an exemption applies or the requirement is waived.
When Congress passed HIPAA in 1996, one of the changes the Act made to the Public Health and Welfare Code was the “General Requirements for the Adoption of Standards”. The General Requirements led to the publication of the Administrative Simplification Regulations which include the HIPAA Transaction Standards (Part 162), the HIPAA Privacy Rule, and the HIPAA Security Rule.
When the first HIPAA Transaction Standards were published in October 2000, the implication was that healthcare providers and medical equipment suppliers only had to apply the standards when submitting electronic claims to Medicare. Indeed, in the preamble to the Part 162 Final Rule, HHS denies any intention to introduce a rumored $1 user fee for each claim submitted to Medicare on paper.
However, in December 2001, a bill (HR 3323) was passed by Congress further amending the Public Health and Welfare Code by prohibiting Medicare from paying “for any expenses incurred for items or services […] for which a claim is submitted other than in an electronic form” (42 USC §1395y(a)(22)). The bill – The Administrative Simplification Compliance Act – allows for exemptions and waivers, but also authorizes HHS to exclude noncompliant entities from participation in Medicare.
Exemptions and Waivers to the Electronic Submissions Requirement
Most of the exemptions and waivers in the Administrative Simplification Compliance Act apply to “small providers”. Small provider claims are generally considered to be claims submitted by providers with fewer than 25 FTEs (10 FTEs for Durable Medical Equipment claims) or claims from providers that submit fewer than 10 claims per month on average during a calendar year.
Other exemptions apply to dental claims, claims for services or supplies furnished outside of the U.S. by non-U.S. providers, and claims submitted by Medicare beneficiaries or Medicare Managed Care Plans. Providers are also exempted if they experience an electricity or communications disruption outside of their control which is expected to last more than two business days.
The conditions for waivers are limited to occasions when providers can demonstrate that a particular type of claim cannot be submitted electronically, when the disability of all members of the provider’s workforce prevents the use of a computer, or when a provider can establish that, due to disruptions outside of their control, HHS’ Centers for Medicare and Medicaid Services should waive the electronic submissions requirements.
How the Administrative Simplification Compliance Act is Enforced
Healthcare providers and medical equipment suppliers can self-assess whether they qualify for an exemption to the Administrative Simplification Compliance Act (waivers have to be applied for). However, if it appears providers are submitting a high number of paper claims, they will be required to verify that they meet one or more of the exemption criteria to continue submitting claims on paper.
The review process consists of submitting information to a Medicare Administrative Contractor that proves an exempted status within 90 days of the status first being queried. If the information is not accepted – or is not submitted within 90 days – all subsequent claims submitted on paper will be denied payment, even if some of the claims meet one or more of the exemption criteria.
Healthcare providers and medical equipment suppliers who are unsure about self-assessing their qualification for an exemption to the Administrative Simplification Compliance Act are advised to refer to §90 – 90.7 of Chapter 24 of the Medicare Claims Processing Manual. Alternatively, if selected for a review, it may be advisable to seek advice from a healthcare compliance professional familiar with the Administrative Simplification Compliance Act.
