Obamacare Rollout Hampered By Operating Rules LagObamacare Rollout Hampered By Operating Rules Lag

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Government health insurance exchanges -- both the state-run ones and the federally operated Healthcare.gov -- might have much less trouble sending enrollment data to the health plans if government-mandated operating rules for that electronic transaction, called the 834 transaction, were already in place. But, due to an inexplicable oversight, the 834 operating rules are not scheduled to go into effect until Jan. 1, 2016.

The administrative simplification provisions of the Affordable Care Act (ACA) require the development of standard operating rules to help providers and health plans use the latest HIPAA-mandated electronic transaction set, known as the 5010. The government has delegated that responsibility to the CORE committee of the Coalition for Quality Affordable Healthcare(CAQH), a 130-member collaborative that includes providers, health insurers, vendors, government agencies and standards-setting bodies.

The first two CORE-developed operating rules were for insurance eligibility and claims status. Those went into effect Jan. 1, 2013, but the Centers for Medicare and Medicaid Services (CMS) delayed enforcement of them until March 31 because the majority of HIPAA-covered entities were not ready to comply with them. CAQH told information Healthcarein an e-mail, "Major commercial payers seem to be doing well in adopting the operating rules. The status of regional payers is not as clear."

[ Want to hear a health insurance exchange success story? See Obamacare Health Exchanges: How Oregon Got It Done. ]

The next two ACA-required operating rules, for electronic remittance advice and electronic funds transfer, will go into effect Jan. 1, 2014. Additional operating rules for claims/encounter information, health plan enrollment/disenrollment, health plan premium payments, referral certification and authorization, and claims attachments will take effect two years later.

All of these operating rules, including those for the 834 transaction, must be completed by July 1, 2014, according to CMS.CAQH CORE is expected to have "full drafts" of those operating rules done by next spring.

So why are these operating rules so important? Why can't health plans simply receive the enrollment files in the 834 format, as required by law? The main reason, according to experts, is that the insurance carriers use disparate and often out-of-date legacy systems that cannot easily be upgraded to receive these standardized files. Consequently, each health plan has its own variation on the HIPAA transaction set. Middlemen must modify files sent in these formats so that the disparate health plan systems can accommodate them.

On the provider side, these middlemen are mostly claims clearinghouses that have long dealt with the myriad plans. On the employer side, which is where most enrollment data originates, there are other intermediaries such as Edifecs. But Healthcare.gov and the state-run exchanges are trying to send the 834 enrollment files directly to the plans -- a key source of the difficulties plans have had in receiving and interpreting this data.

The CAQH CORE operating rules specify exactly how the software of HIPAA-covered entities must be configured so that they can exchange data using the 5010 transaction set. It's assumed that had the 834 standard operating rules been in place, the major carriers, at least, should have had no more difficulty accepting the enrollment data from the state insurance exchanges than they have in receiving inquiries about claims status and eligibility.

CAQH CORE is not responsible for facilitating the health insurance exchanges. Nevertheless, the organization said, "The health insurance exchanges will offer many insights for identifying what operating rules can be useful as CAQH CORE works to develop the third set of ACA-mandated operating rules."

Just how important is the ability of plans to receive 834 transactions from Healthcare.gov and the state-run insurance exchanges? Veteran insurance consultant Bob Laszewski, on his Health Care Policy and Marketplace Review blog, points out that the enrollment data coming from the government has "a very high rate of errors -- way beyond anything they can handle manually once the real enrollment volume comes in ...

"If the Obama administration fixes the consumer portal before fixing the 834 problem, the insurance companies could begin receiving thousands of enrollments with high error rates every day. That would bring the insurance company information technology departments to their knees."

Some reports indicate that state-run exchanges have been better able to enroll applicants than the federally operated exchange. In the case of the Kentucky exchange, one reason for that is that the exchange managers sat downwith the state's health plans and figured out what had to be done to send them the enrollment data.

That won't be so easy, however, for Healthcare.gov. It has been estimated that the website, which represents 36 state exchanges, is dealing with about 4,000 different plans. Even if one assumes that only several hundred carriers are involved, it will take quite a while to iron out all the kinks in the 834 process.

In hindsight, much of this might have been avoided if 834 operating rules were in place. But we'll never know.