HIPAA Transactions and Code Sets
By: Susan H. Fenton, MBA, RHIA

The intent of the national standards enacted under the Health Insurance Portability and Accountability Act is to make it easier for health plans, doctors, hospitals and other health care providers to process claims electronically. The final rule for the HIPAA Transactions and Code Sets was published in the Federal Register on August 17, 2000. The text of the rule can be accessed at http://aspe.hhs.gov/admnsimp/ final/txFR.htm. The deadline for compliance for most covered entities was October 16, 2002. Small health plans were allowed an additional year, until October 16, 2003, by law.

Congress passed the Administrative Simplification Compliance Act in December 2001. This authorized a one-year extension for those covered entities required to comply in 2002. To obtain an extension a covered entity would have had to request extension utilizing the Centers for Medicare and Medicaid Services (CMS) Model Compliance Plan. Covered entities, other than a small health plan, not filing for an extension must have been compliant with the HIPAA Transaction and Code Sets standards by October 16, 2002. The Department of Health and Human Services (HHS) demonstrated its commitment to the standards by announcing that, effective October 15, 2002, CMS will be responsible for enforcing the Transaction and Code Sets standards.
Summary of the Rule

Unless noted differently the information in this section is taken from "Understanding HIPAA Transactions and Code Sets" by Dan Rode in the January 2001 Journal of the American Health Information Management Association.

Code Sets
The final rule on Code Sets identified five medical code sets that will become the standard. It is important to note that some changes have been made regarding their use and context. Additionally, these code sets will become the standard for almost all payers. The code sets are as follows:
o International Classification of Diseases, 9th Edition, Clinical Modification, Volumes 1 and 2 (ICD-9-CM). This code set will be used as it has in the past for diseases, injuries, impairments and other health problems and their manifestations. Health information management (HIM) professionals need to be aware that the International Classification of Diseases, 10th Edition, Clinical Modification (ICD-10-CM) has now been completed and can be found at www.cdc.gov/nchs/about/otheract/icd9/icd10cm.htm. The National Committee on Vital and Health Statistics (NCVHS) is urging the government to adopt ICD-10-CM quickly.
o ICD-9-CM Volume 3, Procedures of the International Classification of Diseases has been limited to procedures or other actions taken for diseases and injuries and impairments on hospital inpatients reported by hospitals and related to prevention, diagnosis, treatment and management. Non-acute facilities, such as long-term care facilities, will no longer be able to use these codes to report procedures and will have to use CPT-4 or HCPCS codes as necessary.
o The Health Care Financing Administration Common Procedure Coding System (HCPCS) and the American Medical Association's Current Procedural Terminology, Fourth Edition (CPT-4) will continue to be used for physician and other healthcare services. The major advantage of the new HIPAA rule is that the coding guidance will now be standardized. HCPCS codes will be used for substances, equipment and supplies, such as injections, durable medical equipment, etc. Level III or "local codes" are to be eliminated.
o National Drug Codes (NDC) were proposed in the final rule for drugs and biologics. On May 31, 2002, CMS published a proposed rule in the Federal Register replacing the NDC with the National Council on Prescription Drug Programs (NCPDP) standard.
o Codes on Dental Procedures and Nomenclature, 2nd Edition, (CDT-2) as maintained and distributed by the American Dental Association will be used for dental claims as appropriate.
o Other "smaller code sets" will be used for data elements such as type of facility, type of units, and state within the address field.

Implementation
The following steps are the minimum recommended for implementing the code sets.
1. Determine where the different code sets are used in your organization.
2. Become familiar with all of the code sets used in your organization as necessary.
3. Initiate education efforts for all staff involved with the code sets, including those using the "smaller code sets" outlined in the final rule.
4. Perform data quality checks to ensure that the code sets are being used correctly.

Transactions
The final rule covers transactions that generally occur between providers and plans/payers or, on occasion, between plans and payers. It mandates that healthcare organizations use the American National Standards Institute (ANSI) Accredited Standards Committee standards for electronic transactions. The required transactions are outlined in Table 1.

The scope of the Transaction Standard includes:
o Electronic transmissions using all media, even when the transmission is physically moved from one location to another using magnetic tape, disk, or CD media.
o Transmissions over the Internet (public network), extranet (private network using Internet technology to link a business collaborating parties), leased lines, dial-up lines, and private networks are all included.
o Telephone voice response and "faxback" systems would not be included.

Implementation
The Transactions portion of the final rule is quite detailed and technical. The Workgroup on Electronic Data Interchange (WEDI) has established a Strategic National Implementation Process (SNIP) for the implementation of HIPAA. Their resources, including white papers, listserves, public conference calls and discussion forums can found at http://snip.wedi.org/public/articles/.
CMS has provided a "HIPAA Readiness Checklist" at www.cms.hhs.gov/hipaa/hipaa2/ReadinessChkLst.pdf to assist providers in determining the steps they need to take to prepare to meet the Transactions and Code Sets deadline. Their high-level steps are as follows:
1. Determine, as a health care provider, if you are covered by HIPAA. CMS offers tools to assist in this at www.cms.hhs.gov/hipaa/hipaa2/ support/tools/decisionsupport/
default.asp.
2. Assign a HIPAA Point Person (HPP) to handle the remaining checklist items.
3. Familiarize yourself with the key HIPAA deadlines. They include the April 16, 2003 deadline for beginning to internally test your software and computer systems.
4. How HIPAA Affects What You Do. Each health care provider is responsible for making sure the software they use will be compliant with HIPAA by the deadlines. You must be certain that your vendors, billing agents, and/or clearing houses are also prepared.
5. Talk to the health plans and payers you bill. Ensure that they are preparing for HIPAA, ask about "Trading Partner Agreements", and coordinate software testing.

This checklist can help get covered entities of all sizes and types started in the right direction for HIPAA Transaction and Code Set compliance.

In summary, the extended deadline for the implementation of the HIPAA Transactions and Code Sets final rule is fast approaching. All reports indicate that there will be no further extensions. It is hoped that some portion of this article is helpful in your efforts.

This article is not meant to be comprehensive, nor does it constitute legal advice.

References
Amatayakul, Margret and Joan Bisterfeldt. "Data Mapping for HIPAA Transactions (HIPAA On the Job Series)." Journal of the American Health Information Management Association vol. 72, no. 7: 16A-E.

Rode, Dan. "Understanding HIPAA Transactions and Code Sets." Journal of the American Health Information Management Association Jan. 2001.

TABLE 1
Required X12N Standard Transactions
837 Claim and coordination of benefits for professionals, institutions, and dentists Replaces UB92 and HCFA 1500
835 Payment and remittance advice
276/277 Claim status request and response
834 Benefit enrollment and maintenance Used by employers to enroll members in health plans (if contractually required)
270/271 Eligibility benefit inquiry and response
820 Payment order and remittance advice Used by employers to pay premiums (if contractually required)
278 Request for services review and response Used for referral authorizations
Table taken from Amatayakul, Margret and Joan Bisterfeldt. "Data Mapping for HIPAA Transactions (HIPAA on the Job series)." Journal of AHIMA 72, no.7 (2001): 16A-E.