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February 21, 2003 (Computerworld) -- The Centers for Medicare & Medicaid Services (CMS) yesterday published its final rules for electronic health care payment transactions (download PDF), adding what vendors and consultants see as yet another burden to an industry scrambling to meet new privacy and electronic security requirements (see story).
Tommy Thompson, secretary of the U.S. Department of Health and Human Services, said in a statement that the new electronic transactions and code-set standards used by doctors, hospitals and insurers to manage payments under the Health Insurance Portability and Accountability Act will "make it easier for the health care industry to process health claims and handle other transactions."
CMS has estimated that total savings to the health care industry resulting from streamlining transactions will be $29 billion.
Those savings will take years to achieve and will come only after the health care industry incorporates the changes into its computer and electronic data interchange (EDI) systems, according to Richard Howe, president of Germantown, Md.-based Axiom Systems Inc., a health care IT company that specializes in systems integration and EDI.
Howe said the new rules, which will go into effect on Oct. 16, will cost the industry millions of dollars in time and effort to incorporate into their systems. He could not provide an exact figure on the cost to the industry. But he said that the changeover will be expensive because the transaction guidelines -- which govern the basics of payments and the submission of claims -- are based on extremely detailed regulations that average 600 pages for each type of transaction.
"Practically everyone in the industry will be impacted by these changes," Howe said.
Not only are health care organizations required to incorporate the changes into their systems, but they also have to test interactions with other companies in the payment food chain -- a complex undertaking, given that there are only eight months between now and the required implementation date. "This is a terrible way to run a business," Howe said. "These changes came out much later than anticipated."
Steve Lazarus, a health care consultant at Boundary Information Group in Denver, said the modifications are needed to correct problems that were discovered by health care organizations three years ago in earlier versions of the code sets.
The updated code sets no longer require that hospitals use codes developed by the retail pharmacy industry to report and manage prescriptions, Lazarus said. Instead, hospitals can now use hospital pharmacy coding systems -- a simpler system, since retail pharmacies dispense drugs or prescriptions by the bottle or package, whereas hospitals dispense them in single-unit doses.
Jon Zimmermann, vice president for e-health at Siemens Medical Solutions, a division of Siemens AG in Munich, Germany, called the shift from retail to hospital codes a "welcome change" but noted that the final transaction and coding standards have taken more than a decade to develop.
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