ACA Now

Statutory Text

SEC. 1104. ADMINISTRATIVE SIMPLIFICATION.
(a) PURPOSE OF ADMINISTRATIVE SIMPLIFICATION.—Section 261
of the Health Insurance Portability and Accountability Act of 1996
(42 U.S.C. 1320d note) is amended—
(1) by inserting ‘‘uniform’’ before ‘‘standards’’; and
(2) by inserting ‘‘and to reduce the clerical burden on patients,
health care providers, and health plans’’ before the period
at the end.
(b) OPERATING RULES FOR HEALTH INFORMATION TRANSACTIONS.—
(1) DEFINITION OF OPERATING RULES.—Section 1171 of the
Social Security Act (42 U.S.C. 1320d) is amended by adding at
the end the following:
‘‘(9) OPERATING RULES.—The term ‘operating rules’ means
the necessary business rules and guidelines for the electronic
exchange of information that are not defined by a standard or
its implementation specifications as adopted for purposes of
this part.’’.
(2) TRANSACTION STANDARDS; OPERATING RULES AND COMPLIANCE.—Section
1173 of the Social Security Act (42 U.S.C.
1320d–2) is amended—
(A) in subsection (a)(2), by adding at the end the following
new subparagraph:
‘‘(J) Electronic funds transfers.’’;
(B) in subsection (a), by adding at the end the following
new paragraph:
‘‘(4) REQUIREMENTS FOR FINANCIAL AND ADMINISTRATIVE
TRANSACTIONS.—
‘‘(A) IN GENERAL.—The standards and associated operating
rules adopted by the Secretary shall—
‘‘(i) to the extent feasible and appropriate, enable
determination of an individual’s eligibility and financial
responsibility for specific services prior to or at the
point of care;
‘‘(ii) be comprehensive, requiring minimal augmentation
by paper or other communications;
‘‘(iii) provide for timely acknowledgment, response,
and status reporting that supports a transparent
claims and denial management process (including adjudication
and appeals); and
‘‘(iv) describe all data elements (including reason
and remark codes) in unambiguous terms, require that
such data elements be required or conditioned upon
set values in other fields, and prohibit additional conditions
(except where necessary to implement State or
Federal law, or to protect against fraud and abuse).
‘‘(B) REDUCTION OF CLERICAL BURDEN.—In adopting
standards and operating rules for the transactions referred
to under paragraph (1), the Secretary shall seek to reduce
the number and complexity of forms (including paper and
electronic forms) and data entry required by patients and
providers.
[Section 10109(a), p. 838, added a paragraph (5) relating to
consideration of standardization of activities and items]
(C) by adding at the end the following new subsections:

‘‘(g) OPERATING RULES.— ‘‘(1) IN GENERAL.—The Secretary shall adopt a single set of
operating rules for each transaction referred to under subsection
(a)(1) with the goal of creating as much uniformity in
the implementation of the electronic standards as possible.
Such operating rules shall be consensus-based and reflect the
necessary business rules affecting health plans and health care
providers and the manner in which they operate pursuant to
standards issued under Health Insurance Portability and Accountability
Act of 1996.
‘‘(2) OPERATING RULES DEVELOPMENT.—In adopting operating
rules under this subsection, the Secretary shall consider
recommendations for operating rules developed by a qualified
nonprofit entity that meets the following requirements:
‘‘(A) The entity focuses its mission on administrative
simplification.
‘‘(B) The entity demonstrates a multi-stakeholder and
consensus-based process for development of operating
rules, including representation by or participation from
health plans, health care providers, vendors, relevant Federal
agencies, and other standard development organizations.

‘‘(C) The entity has a public set of guiding principles
that ensure the operating rules and process are open and
transparent, and supports nondiscrimination and conflict
of interest policies that demonstrate a commitment to
open, fair, and nondiscriminatory practices.
‘‘(D) The entity builds on the transaction standards
issued under Health Insurance Portability and Accountability
Act of 1996.
‘‘(E) The entity allows for public review and updates of
the operating rules.
‘‘(3) REVIEW AND RECOMMENDATIONS.—The National Committee
on Vital and Health Statistics shall—
‘‘(A) advise the Secretary as to whether a nonprofit entity
meets the requirements under paragraph (2);
‘‘(B) review the operating rules developed and recommended
by such nonprofit entity;
‘‘(C) determine whether such operating rules represent
a consensus view of the health care stakeholders and are
consistent with and do not conflict with other existing
standards;
‘‘(D) evaluate whether such operating rules are consistent
with electronic standards adopted for health information
technology; and
‘‘(E) submit to the Secretary a recommendation as to
whether the Secretary should adopt such operating rules.
‘‘(4) IMPLEMENTATION.—
‘‘(A) IN GENERAL.—The Secretary shall adopt operating
rules under this subsection, by regulation in accordance
with subparagraph (C), following consideration of the operating
rules developed by the non-profit entity described in
paragraph (2) and the recommendation submitted by the
National Committee on Vital and Health Statistics under
paragraph (3)(E) and having ensured consultation with
providers.
‘‘(B) ADOPTION REQUIREMENTS; EFFECTIVE DATES.— ‘‘(i) ELIGIBILITY FOR A HEALTH PLAN AND HEALTH
CLAIM STATUS.—The set of operating rules for eligibility
for a health plan and health claim status transactions
shall be adopted not later than July 1, 2011,
in a manner ensuring that such operating rules are effective
not later than January 1, 2013, and may allow
for the use of a machine readable identification card.
‘‘(ii) ELECTRONIC FUNDS TRANSFERS AND HEALTH
CARE PAYMENT AND REMITTANCE ADVICE.—The set of
operating rules for electronic funds transfers and
health care payment and remittance advice transactions
shall—
‘‘(I) allow for automated reconciliation of the
electronic payment with the remittance advice;
and
‘‘(II) be adopted not later than July 1, 2012, in
a manner ensuring that such operating rules are
effective not later than January 1, 2014.
‘‘(iii) HEALTH CLAIMS OR EQUIVALENT ENCOUNTER
INFORMATION, ENROLLMENT AND DISENROLLMENT IN A
HEALTH PLAN, HEALTH PLAN PREMIUM PAYMENTS, REFERRAL
CERTIFICATION AND AUTHORIZATION.—The set
of operating rules for health claims or equivalent encounter
information, enrollment and disenrollment in
a health plan, health plan premium payments, and referral
certification and authorization transactions
shall be adopted not later than July 1, 2014, in a manner
ensuring that such operating rules are effective
not later than January 1, 2016.
‘‘(C) EXPEDITED RULEMAKING.—The Secretary shall
promulgate an interim final rule applying any standard or
operating rule recommended by the National Committee
on Vital and Health Statistics pursuant to paragraph (3).
The Secretary shall accept and consider public comments
on any interim final rule published under this subparagraph
for 60 days after the date of such publication.
‘‘(h) COMPLIANCE.—
‘‘(1) HEALTH PLAN CERTIFICATION.—
‘‘(A) ELIGIBILITY FOR A HEALTH PLAN, HEALTH CLAIM
STATUS, ELECTRONIC FUNDS TRANSFERS, HEALTH CARE PAY- MENT AND REMITTANCE ADVICE.—Not later than December
31, 2013, a health plan shall file a statement with the Secretary,
in such form as the Secretary may require, certifying
that the data and information systems for such plan
are in compliance with any applicable standards (as described
under paragraph (7) of section 1171) and associated
operating rules (as described under paragraph (9) of
such section) for electronic funds transfers, eligibility for a
health plan, health claim status, and health care payment
and remittance advice, respectively.
‘‘(B) HEALTH CLAIMS OR EQUIVALENT ENCOUNTER IN- FORMATION, ENROLLMENT AND DISENROLLMENT IN A
HEALTH PLAN, HEALTH PLAN PREMIUM PAYMENTS, HEALTH
CLAIMS ATTACHMENTS, REFERRAL CERTIFICATION AND AUTHORIZATION.—
Not later than December 31, 2015, a health
plan shall file a statement with the Secretary, in such
form as the Secretary may require, certifying that the data
and information systems for such plan are in compliance
with any applicable standards and associated operating
rules for health claims or equivalent encounter information,
enrollment and disenrollment in a health plan, health
plan premium payments, health claims attachments, and
referral certification and authorization, respectively. A
health plan shall provide the same level of documentation
to certify compliance with such transactions as is required
to certify compliance with the transactions specified in
subparagraph (A).
‘‘(2) DOCUMENTATION OF COMPLIANCE.—A health plan shall
provide the Secretary, in such form as the Secretary may require,
with adequate documentation of compliance with the
standards and operating rules described under paragraph (1).
A health plan shall not be considered to have provided adequate
documentation and shall not be certified as being in compliance
with such standards, unless the health plan—
‘‘(A) demonstrates to the Secretary that the plan conducts
the electronic transactions specified in paragraph (1)
in a manner that fully complies with the regulations of the
Secretary; and
‘‘(B) provides documentation showing that the plan
has completed end-to-end testing for such transactions
with their partners, such as hospitals and physicians.
‘‘(3) SERVICE CONTRACTS.—A health plan shall be required
to ensure that any entities that provide services pursuant to a
contract with such health plan shall comply with any applicable
certification and compliance requirements (and provide the
Secretary with adequate documentation of such compliance)
under this subsection.
‘‘(4) CERTIFICATION BY OUTSIDE ENTITY.—The Secretary
may designate independent, outside entities to certify that a
health plan has complied with the requirements under this
subsection, provided that the certification standards employed
by such entities are in accordance with any standards or operating
rules issued by the Secretary.
‘‘(5) COMPLIANCE WITH REVISED STANDARDS AND OPERATING
RULES.—
‘‘(A) IN GENERAL.—A health plan (including entities
described under paragraph (3)) shall file a statement with
the Secretary, in such form as the Secretary may require,
certifying that the data and information systems for such
plan are in compliance with any applicable revised standards
and associated operating rules under this subsection
for any interim final rule promulgated by the Secretary
under subsection (i) that—
‘‘(i) amends any standard or operating rule described
under paragraph (1) of this subsection; or
‘‘(ii) establishes a standard (as described under
subsection (a)(1)(B)) or associated operating rules (as
described under subsection (i)(5)) for any other financial
and administrative transactions.
‘‘(B) DATE OF COMPLIANCE.—A health plan shall comply
with such requirements not later than the effective
date of the applicable standard or operating rule.
‘‘(6) AUDITS OF HEALTH PLANS.—The Secretary shall conduct
periodic audits to ensure that health plans (including entities
described under paragraph (3)) are in compliance with
any standards and operating rules that are described under
paragraph (1) or subsection (i)(5).
‘‘(i) REVIEW AND AMENDMENT OF STANDARDS AND OPERATING
RULES.—‘‘(1) ESTABLISHMENT.—Not later than January 1, 2014, the
Secretary shall establish a review committee (as described
under paragraph (4)).
‘‘(2) EVALUATIONS AND REPORTS.—
‘‘(A) HEARINGS.—Not later than April 1, 2014, and not
less than biennially thereafter, the Secretary, acting
through the review committee, shall conduct hearings to
evaluate and review the adopted standards and operating
rules established under this section.
‘‘(B) REPORT.—Not later than July 1, 2014, and not
less than biennially thereafter, the review committee shall
provide recommendations for updating and improving such
standards and operating rules. The review committee shall
recommend a single set of operating rules per transaction
standard and maintain the goal of creating as much uniformity
as possible in the implementation of the electronic
standards.
‘‘(3) INTERIM FINAL RULEMAKING.—
‘‘(A) IN GENERAL.—Any recommendations to amend
adopted standards and operating rules that have been approved
by the review committee and reported to the Secretary
under paragraph (2)(B) shall be adopted by the Secretary
through promulgation of an interim final rule not
later than 90 days after receipt of the committee’s report.
‘‘(B) PUBLIC COMMENT.—
‘‘(i) PUBLIC COMMENT PERIOD.—The Secretary
shall accept and consider public comments on any interim
final rule published under this paragraph for 60
days after the date of such publication.
‘‘(ii) EFFECTIVE DATE.—The effective date of any
amendment to existing standards or operating rules
that is adopted through an interim final rule published
under this paragraph shall be 25 months following
the close of such public comment period. ‘‘(4) REVIEW COMMITTEE.—
‘‘(A) DEFINITION.—For the purposes of this subsection,
the term ‘review committee’ means a committee chartered
by or within the Department of Health and Human services
that has been designated by the Secretary to carry out
this subsection, including—
‘‘(i) the National Committee on Vital and Health
Statistics; or
‘‘(ii) any appropriate committee as determined by
the Secretary.
‘‘(B) COORDINATION OF HIT STANDARDS.—In developing
recommendations under this subsection, the review committee
shall ensure coordination, as appropriate, with the
standards that support the certified electronic health
record technology approved by the Office of the National
Coordinator for Health Information Technology.
‘‘(5) OPERATING RULES FOR OTHER STANDARDS ADOPTED BY
THE SECRETARY.—The Secretary shall adopt a single set of operating
rules (pursuant to the process described under subsection
(g)) for any transaction for which a standard had been
adopted pursuant to subsection (a)(1)(B).
‘‘(j) PENALTIES.—
‘‘(1) PENALTY FEE.—
‘‘(A) IN GENERAL.—Not later than April 1, 2014, and
annually thereafter, the Secretary shall assess a penalty
fee (as determined under subparagraph (B)) against a
health plan that has failed to meet the requirements
under subsection (h) with respect to certification and documentation
of compliance with—
‘‘(i) the standards and associated operating rules
described under paragraph (1) of such subsection; and
‘‘(ii) a standard (as described under subsection
(a)(1)(B)) and associated operating rules (as described
under subsection (i)(5)) for any other financial and administrative
transactions.
‘‘(B) FEE AMOUNT.—Subject to subparagraphs (C), (D),
and (E), the Secretary shall assess a penalty fee against a
health plan in the amount of $1 per covered life until certification
is complete. The penalty shall be assessed per
person covered by the plan for which its data systems for
major medical policies are not in compliance and shall be
imposed against the health plan for each day that the plan
is not in compliance with the requirements under subsection
(h).
‘‘(C) ADDITIONAL PENALTY FOR MISREPRESENTATION.—A
health plan that knowingly provides inaccurate or incomplete
information in a statement of certification or documentation
of compliance under subsection (h) shall be subject
to a penalty fee that is double the amount that would
otherwise be imposed under this subsection.
‘‘(D) ANNUAL FEE INCREASE.—The amount of the penalty
fee imposed under this subsection shall be increased
on an annual basis by the annual percentage increase in
total national health care expenditures, as determined by
the Secretary.
‘‘(E) PENALTY LIMIT.—A penalty fee assessed against a
health plan under this subsection shall not exceed, on an
annual basis—
‘‘(i) an amount equal to $20 per covered life under
such plan; or
‘‘(ii) an amount equal to $40 per covered life under
the plan if such plan has knowingly provided inaccurate
or incomplete information (as described under
subparagraph (C)).
‘‘(F) DETERMINATION OF COVERED INDIVIDUALS.—The
Secretary shall determine the number of covered lives
under a health plan based upon the most recent statements
and filings that have been submitted by such plan
to the Securities and Exchange Commission.
‘‘(2) NOTICE AND DISPUTE PROCEDURE.—The Secretary shall
establish a procedure for assessment of penalty fees under this
subsection that provides a health plan with reasonable notice
and a dispute resolution procedure prior to provision of a notice
of assessment by the Secretary of the Treasury (as described
under paragraph (4)(B)).
‘‘(3) PENALTY FEE REPORT.—Not later than May 1, 2014,
and annually thereafter, the Secretary shall provide the Secretary
of the Treasury with a report identifying those health
plans that have been assessed a penalty fee under this subsection.
‘‘(4) COLLECTION OF PENALTY FEE.—
‘‘(A) IN GENERAL.—The Secretary of the Treasury, acting
through the Financial Management Service, shall administer
the collection of penalty fees from health plans
that have been identified by the Secretary in the penalty
fee report provided under paragraph (3).
‘‘(B) NOTICE.—Not later than August 1, 2014, and annually
thereafter, the Secretary of the Treasury shall provide
notice to each health plan that has been assessed a
penalty fee by the Secretary under this subsection. Such
notice shall include the amount of the penalty fee assessed
by the Secretary and the due date for payment of such fee
to the Secretary of the Treasury (as described in subparagraph
(C)).
‘‘(C) PAYMENT DUE DATE.—Payment by a health plan
for a penalty fee assessed under this subsection shall be
made to the Secretary of the Treasury not later than November
1, 2014, and annually thereafter.
‘‘(D) UNPAID PENALTY FEES.—Any amount of a penalty
fee assessed against a health plan under this subsection
for which payment has not been made by the due date provided
under subparagraph (C) shall be—
‘‘(i) increased by the interest accrued on such
amount, as determined pursuant to the underpayment
rate established under section 6621 of the Internal
Revenue Code of 1986; and
‘‘(ii) treated as a past-due, legally enforceable debt
owed to a Federal agency for purposes of section
6402(d) of the Internal Revenue Code of 1986.
‘‘(E) ADMINISTRATIVE FEES.—Any fee charged or allocated
for collection activities conducted by the Financial
Management Service will be passed on to a health plan on
a pro-rata basis and added to any penalty fee collected
from the plan.’’.
(c) PROMULGATION OF RULES.—
(1) UNIQUE HEALTH PLAN IDENTIFIER.—The Secretary shall
promulgate a final rule to establish a unique health plan identifier
(as described in section 1173(b) of the Social Security Act
(42 U.S.C. 1320d–2(b))) based on the input of the National
Committee on Vital and Health Statistics. The Secretary may
do so on an interim final basis and such rule shall be effective
not later than October 1, 2012.
(2) ELECTRONIC FUNDS TRANSFER.—The Secretary shall
promulgate a final rule to establish a standard for electronic
funds transfers (as described in section 1173(a)(2)(J) of the Social
Security Act, as added by subsection (b)(2)(A)). The Secretary
may do so on an interim final basis and shall adopt such
standard not later than January 1, 2012, in a manner ensuring
that such standard is effective not later than January 1, 2014.
(3) HEALTH CLAIMS ATTACHMENTS.—The Secretary shall
promulgate a final rule to establish a transaction standard and
a single set of associated operating rules for health claims attachments
(as described in section 1173(a)(2)(B) of the Social
Security Act (42 U.S.C. 1320d–2(a)(2)(B))) that is consistent
with the X12 Version 5010 transaction standards. The Secretary
may do so on an interim final basis and shall adopt a
transaction standard and a single set of associated operating
rules not later than January 1, 2014, in a manner ensuring
that such standard is effective not later than January 1, 2016.
(d) EXPANSION OF ELECTRONIC TRANSACTIONS IN MEDICARE.—
Section 1862(a) of the Social Security Act (42 U.S.C. 1395y(a)) is
amended—
(1) in paragraph (23), by striking the ‘‘or’’ at the end;
(2) in paragraph (24), by striking the period and inserting
‘‘; or’’; and
(3) by inserting after paragraph (24) the following new
paragraph:
‘‘(25) not later than January 1, 2014, for which the payment
is other than by electronic funds transfer (EFT) or an
electronic remittance in a form as specified in ASC X12 835
Health Care Payment and Remittance Advice or subsequent
standard.’’.
[Section 10109, p. 838, provided for development of standards
for financial and administrative transactions]