HIPAA Transactions and Code Sets Rules
The HIPAA transactions and code sets rules have the objective of replacing non-standard descriptions of healthcare activities with standard formats for each type of activity in order to streamline administrative processes, lower operating costs, and improve the quality of data.
During the 1970s and 1980s, an increasing number of organizations in the healthcare and health insurance industries adopted Electronic Data Interchanges (EDIs) to accelerate manual healthcare processes such as eligibility checks, treatment authorizations, and remittance advices. However, many organizations developed proprietary transaction and code set formats to describe specific healthcare activities based on the formats used for internal operations.
Consequently, prior to the passage of HIPAA, it was estimated there were up to 400 proprietary formats in use. Acknowledging this would be a barrier to the objectives of the Administrative Simplification Regulations, Congress instructed the Secretary of Health and Human Services (HHS) to adopt standard HIPAA transactions and code sets rules for health plans, health care clearinghouses, and healthcare providers that transmitted health information electronically.
HIPAA Transactions and Code Sets Rules Adopted Quickly
At the time, most federal agencies and larger private organizations had adopted formats based on the ICD-9-CM and ASC X12N classification systems for diseases and medical data elements (i.e., diagnoses, procedures, and drugs). Indeed, many of the classification systems that would eventually be adopted as the HIPAA transactions and code sets rules were already mandated for use in some federal and state healthcare programs – including Medicare and Medicaid.
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Because the adoption of standard formats was at an advance stage, it did not take long for proposed HIPAA transactions and code sets rules to be published (May 1998), and for the rules to be finalized (August 2000). The rules omitted code sets for health claims attachments and first report of injury transactions (which are still “deferred”), but included code sets for coordination of benefits transactions. The list of HIPAA transactions for which code sets apply are:
Payment and Remittance Advice and Electronic Funds Transfer.
Health Plan Eligibility Benefit Inquiry and Response.
Claim or Equivalent Encounter Information.
Health Plan Enrollment and Disenrollment.
Referral Certification and Authorization.
The Standards for Code Sets are Updated Frequently
While the only change to the list of transactions was the addition of code sets for Medicaid pharmacy subrogation transactions in January 2009, the standards for the code sets used in HIPAA transactions are updated frequently. For example, ICD-9-CM code sets were replaced by ICD-10-CM in October 2015, Healthcare Common Procedure Coding System (HCPCS) code sets are updated quarterly, and the National Drug Code Directory is updated daily.
In addition, since January 2014, health plans have had to comply with the HIPAA Operating Rules as required by §1104 of the Patient Protection and Affordable Care Act. The HIPAA Operating Rules place additional requirements on health plans to provide quicker, more complete responses to healthcare providers when healthcare providers make inquiries about individuals’ eligibility for benefits, claim statuses, fund transfers, and remittance advices.
How Compliance with the Rules is Enforced
Compliance with the HIPAA transactions and code sets rules is enforced by HHS’ Centers for Medicare and Medicaid Services (CMS). CMS has the authority to investigate complaints made by covered entities when another covered entity is using incorrect transaction codes or HIPAA identifiers, or not complying with the HIPAA Operating Rules. Covered entities can test compliance with the HIPAA transactions and code sets rules and file complaints via CMS’ ASETT portal.
If a complaint is investigated and found to be justified, CMS has the same enforcement powers as HHS’ Office for Civil Rights. This means CMS can impose corrective action plans or civil money penalties for compliance failures. In addition, via HHS’ Office of Inspector General, CMS can also exclude healthcare providers from federal healthcare programs if the failure to comply with the HIPAA transactions and code set rules is attributable to fraud, theft, abuse, neglect, or an unlawful activity.
