States balk at outdated standard for medical files

States balk at outdated standard for medical files


The federal government is requiring states to use 22-year-old standards for health care data transactions.

The requirements will force states to devote significant resources to updating software, officials said.

The Health Insurance Portability and Accountability Act (HIPAA) Administrative Simplification rules for transactions and coding standards require states to adopt the American National Standards Institute Accredited Standards Committee's (ASC) X12N Version 4010 for all health care transactions, except retail pharmacy transactions.
The committee developed X12N in 1979.

The HIPAA rules, which were published last fall, are intended to standardize data content and formats for submitting electronic claims and other administrative health transactions.
All government health plans, including Medicare, Medicaid, military health programs for active duty and civilian personnel, the Veterans Health Administration and the Bureau of Indian Affairs health service programs, must comply with the standards by October 2002.
Almost all private-sector health care clearinghouses, health care providers and health plans that handle transactions electronically must use the standards.

Employers who provide health insurance to their workers and their dependents also must use X12N to enroll employees and to submit premium payments to insurance providers.


Jack Hornfeldt, Massachusetts Medical Assistance Division chief information officer, said that although X12N is outdated, it still works.

'It's like a '60s automobile. It's considered a classic to some and obsolete to others, but it still runs,' he said.

OK with industry

Henry Chao, Health Care Financing Administration health insurance specialist, said that though only a few states now use X12N on a limited basis, the federal Health and Human Services Department chose X12N because most private-sector health insurance companies already use it for electronic data interchange.

'To attempt to come up with another standard and create an entirely new framework would have taken several years,' Chao said.

Private-sector health care organizations have lobbied for the use of X12N as a national standard since the early 1990s, Chao said.

Health and Human Services officials said once X12N is in place, health plans will be able to pay providers, authorize services, certify referrals and coordinate benefits using a standard electronic format for each transaction.

HHS officials said providers also will be able to use a standard format to determine eligibility for insurance coverage, check the status of a claim, request authorizations for services or specialist referrals, and get paid electronically.

The new regulations are expected to save the health care industry $29.9 billion over 10 years, according to HHS officials.

The new regulations include national standards for other common transactions, such as changing codes used to define diagnoses and medical procedures in the transactions.

'It's a little ironic that they call it the simplification standard because it will involve a major data mapping activity for all states,' Hornfeldt said. 'Ultimately, standardization will be a good thing for everyone.

'But the first few years will be difficult for any states that are looking back at transactions because the diagnoses and medical codes will be different,' he said. 'It will be a hard thing to track. We process 1 million claims a week in Massachusetts. It's going to be a little confusing for at least the first three years.'

All for one

A few states banded together last year to form the National Medicaid EDI HIPAA Work Group, a voluntary support organization that will study the issues states face in implementing X12N for Medicaid systems.

Diane Davidson, Kansas Medical Policy Division management systems analyst, leads the workgroup and said most states now have a representative in the group.

'We discuss all things involved in trying to meet these very aggressive requirements,' Davidson said. 'We cover everything from what we have to do to get our systems in order to how we go about getting state policy changed to meet the requirements.'

Hornfeldt said a major issue states face in implementing X12N is manpower.

'It very much involves resource issues,' he said. 'We all have to keep our existing operations in order while working to make the required changes. It's hard for most states to just keep a technical staff to do what we are already doing. It's going to be difficult to divert our resources and staff to work on the new regulations.'

Let's talk about it

HCFA is scheduling a three-day conference in April in Baltimore to bring states and contractors together to discuss transactions and codes issues.

Chao said HCFA teamed with Avistar Communications Corp. of Redwood Shores, Calif., and Sox Systems of Scottsdale, Ariz., to create a business model to help state Medicaid programs transition to new HIPAA requirements. States will receive the tool at the April conference.

For more information on the conference, see the HCFA Web site at


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