32784 Federal Register / Vol. 63, No. 115 /Tuesday, June 16, 1998 / Proposed Rules

SW, Atlanta, GA 30303, (404) 562–

9105

Region V: George T. Czerniak, Jr., Air

Enforcement Branch Chief, U.S. EPA/

5AE–26 Region V, 77 West Jackson

Street, Chicago, IL 60604, (312) 353–

2088

Region VI: John R. Hepola, Air

Enforcement Branch Chief, U.S. EPA

Region VI, 1445 Ross Avenue, Suite

1200, Dallas, TX 75202–2733, (214)

655–7220

Region VII: Ward Burns, U.S. EPA/RME,

Region VII, 726 Minnesota Avenue/

ARTDAPCO, Kansas City, KS 66101–

2728, (913) 551–7960

Region VIII: Vicki Stamper, U.S. EPA,

Region VIII, 999 18th Street, Suite

500, Denver, CO 80202–2466, (303)

312–6445

Region IX: Patricia Bowlin, U.S. EPA/

RM HAN/17211, Region IX, 75

Hawthorne Street/AIR–4, San

Francisco, CA, (415) 744–1188

Region X: Catherine Woo, U.S. EPA,

Region X, Office of Air Quality

Planning and Standards-107, 1200

Sixth Avenue, Seattle, WA 98101,

(206) 553–1814.

SUPPLEMENTARY INFORMATION: If no

relevant adverse comments are timely

received on these proposed

amendments, no further activity is

contemplated in relation to this

proposed rule, and the companion

direct final rule in the final rules section

of this Federal Register will

automatically become effective on the

date specified in that final rule. If

relevant adverse comments are received

on this proposal, a timely document

informing the public that the direct final

rule is withdrawn will be published,

and all public comments received will

be addressed in a subsequent final rule

based on this proposed rule. Because

the Agency will not institute a second

comment period on this proposed rule,

any parties interested in commenting

should do so during this comment

period.

For further supplemental information,

the detailed rationale, and the specific

amendments being proposed, see the

information provided in the direct final

rule in the final rules section of this

Federal Register.

Electronic Submittal of Comments

Comments and data may also be

submitted electronically to A-and-RDocket@epamail.epa.gov. No

Confidential Business Information (CBI)

should be submitted through e-mail.

Electronic comments must be submitted

as an ASCII file avoiding the use of

special characters and any form of

encryption. Electronic comments on this

proposed rule may be filed online at

many Federal Depository Libraries.

Comments and data will also be

accepted on disks in WordPerfect 5.1

or 6.1 file format or ASCII file format.

All comments and data for this

proposal, whether in paper form or in

electronic forms such as through e-mail

or on disk, must be identified by the

docket number A–88–09 Category V–d.

Administrative

A. Executive Order 12866 Review

Under Executive Order 12866 Order

12866 (58 FR 51735, October 4, 1993),

EPA must determine whether the

regulatory action is ‘‘significant’’ and,

therefore, subject to OMB review and

the requirements of the Executive Order.

The EPA considered the 1996

promulgated standards to be significant

and the rules were reviewed by OMB

(see 61 FR 9913). The amendments

proposed today do not result in any

additional control requirements.

Therefore, this regulatory action is

considered ‘‘not significant’’ under

Executive Order 12866.

B. Small Business Regulatory Flexibility

The Regulatory Flexibility Act (RFA)

generally requires an agency to conduct

a regulatory flexibility analysis of any

rule subject to notice and comment

rulemaking requirements unless the

agency certifies that the rule will not

have a significant impact on a

substantial number of small entities.

Small entities include small businesses,

small not-for-profit enterprises, and

small governmental jurisdictions.

During the 1996 rulemaking, EPA

estimated that no small entities would

be affected by the promulgated

standards and guidelines and, therefore,

a regulatory flexibility analysis was not

required (see 61 FR 9918). The proposed

rule amendments do not establish any

new requirements or create additional

burden for any regulated entities. The

changes in today’s action do not

increase the stringency of the rule or

add additional control requirements.

Nor is the scope of the rule changed so

as to bring any entities not previously

subject to the rule within its scope or

coverage. Today’s action does not alter

control, monitoring, recordkeeping, or

reporting requirements of the

promulgated rule. Therefore, pursuant

to the provisions of 5 U.S.C. 605(b), I

hereby certify that the amendments to

the guidelines and standards will not

have a significant impact on a

substantial number of small entities,

and a regulatory flexibility analysis is

not required.

C. Executive Order 12875 and Unfunded

Mandates Act

Under section 202 of the Unfunded

Mandates Reform Act of 1995

(‘‘Unfunded Mandates Act’’), signed

into law on March 22, 1995, EPA must

prepare a statement to accompany any

rule where the estimated costs to State,

local, or tribal governments, or to the

private sector will be $100 million or

more in any one year. Section 203

requires EPA to establish a plan for

informing and advising any small

governments that may be significantly

impacted by the rule.

An unfunded mandates statement was

prepared and published in the 1996

promulgation notice (see 61 FR 9913–

9918).

The EPA has determined that these

amendments do not include any new

Federal mandate. Therefore, the

requirements of the Unfunded Mandates

Act do not apply to this proposed rule.

D. Children’s Health Protection

This proposed rule is not subject to

E.O. 13045, entitled, ‘‘Protection of

Children from Environmental Health

Risks and Safety Risks’’ (62 FR 19885,

April 23, 1997), because it does not

involve decisions on environmental

health risks or safety risks that may

disproportionately affect children.

List of Subjects in 40 CFR Part 60

Environmental protection, Air

pollution control, Municipal solid waste

landfills.

Dated: May 28, 1998.

Carol M. Browner,

Administrator.

[FR Doc. 98–15008 Filed 6–15–98; 8:45 am]

BILLING CODE 6560–50–P

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Office of the Secretary

45 CFR Part 142

[HCFA–0047–P]

RIN 0938–AI59

Health Insurance Reform: National

Standard Employer Identifier

AGENCY: Health Care Financing

Administration (HCFA), HHS.

ACTION: Proposed rule.

SUMMARY: This rule proposes a standard

for a national employer identifier and

requirements concerning its use by

health plans, health care clearinghouses,

and health care providers. The health

plans, health care clearinghouses, and
Federal Register / Vol. 63, No. 115 /Tuesday, June 16, 1998 / Proposed Rules 32785

health care providers would use the

identifier, among other uses, in

connection with certain electronic

transactions.

The use of this identifier would

improve the Medicare and Medicaid

programs, and other Federal health

programs and private health programs,

and the effectiveness and efficiency of

the health care industry in general, by

simplifying the administration of the

system and enabling the efficient

electronic transmission of certain health

information. It would implement some

of the requirements of the

Administrative Simplification subtitle

of the Health Insurance Portability and

Accountability Act of 1996.

DATES: Comments will be considered if

we receive them at the appropriate

address, as provided below, no later

than 5 p.m. on August 17, 1998.

ADDRESSES: Mail written comments (1

original and 3 copies) to the following

address: Health Care Financing

Administration, Department of Health

and Human Services, Attention: HCFA–

0047–P, P.O. Box 26676, Baltimore, MD

21207–0519.

If you prefer, you may deliver your

written comments (1 original and 3

copies) to one of the following

addresses:

Room 309–G, Hubert H. Humphrey

Building, 200 Independence Avenue,

SW., Washington, DC 20201, or

Room C5–09–26, 7500 Security

Boulevard, Baltimore, MD 21244–

1850.

Comments may also be submitted

electronically to the following e-mail

address: employer@osaspe.dhhs.gov.

For e-mail and comment procedures, see

the beginning of SUPPLEMENTARY

INFORMATION. For information on

ordering copies of the Federal Register

containing this document and on

electronic access, see the beginning of

SUPPLEMENTARY INFORMATION.

FOR FURTHER INFORMATION CONTACT:

Mary Emerson, (410) 786–7065.

SUPPLEMENTARY INFORMATION:

E-mail Comments, Procedures,

Availability of Copies, and Electronic

Access: E-mail comments should

include the full name, postal address,

and affiliation (if applicable) of the

sender and must be submitted to the

referenced address to be considered. All

comments should be incorporated in the

e-mail message because we may not be

able to access attachments. Because of

staffing and resource limitations, we

cannot accept comments by facsimile

(FAX) transmission. In commenting,

please refer to file code HCFA–0047–P

and the specific section or sections of

the proposed rule. Both electronic and

written comments received by the time

and date indicated above will be

available for public inspection as they

are received, generally beginning

approximately 3 weeks after publication

of a document, in Room 309–G of the

Department’s offices at 200

Independence Avenue, SW.,

Washington, DC, on Monday through

Friday of each week from 8:30 a.m. to

5 p.m. (phone: (202) 690–7890).

Electronic and legible written comments

will also be posted, along with this

proposed rule, at the following web site:

http://aspe.os.dhhs.gov/admnsimp/.

Copies: To order copies of the Federal

Register containing this document, send

your request to: New Orders,

Superintendent of Documents, P.O. Box

371954, Pittsburgh, PA 15250–7954.

Specify the date of the issue requested

and enclose a check or money order

payable to the Superintendent of

Documents, or enclose your Visa or

Master Card number and expiration

date. Credit card orders can also be

placed by calling the order desk at (202)

512–1800 or by faxing to (202) 512–

2250. The cost for each copy is $8. As

an alternative, you can view and

photocopy the Federal Register

document at most libraries designated

as Federal Depository Libraries and at

many other public and academic

libraries throughout the country that

receive the Federal Register.

This Federal Register document is

also available from the Federal Register

online database through GPO Access, a

service of the U.S. Government Printing

Office. Free public access is available on

a Wide Area Information Server (WAIS)

through the Internet and via

asynchronous dial-in. Internet users can

access the database by using the World

Wide Web http://www.access.gpo.gov/

nara, by using local WAIS client

software, or by telnet to

swais.access.gpo.gov, then login as guest

(no password required). Dial-in users

should use communications software

and modem to call (202) 512–1661; type

swais, then login as guest (no password

required).

I. Background

[Please label written and e-mailed

comments about this section with the

subject: Background.]

When claims are filed, employer

information is used by health plans to

identify the employer of the participant

in the health plan and to develop

coordination of benefits information.

Employers may transmit information

to health plans when enrolling or

disenrolling an employee as a

participant in a health plan. Employers,

health care providers, and health plans

may need to identify the source or

receiver of eligibility or benefit

information. Although the source or

receiver is usually a health plan, it

could be an employer. Employers,

health care providers, and health plans

may need to identify the employer when

making or keeping track of health plan

premium payments or contributions

relating to an employee. In all cases

where information about the employer

is transmitted electronically, it would be

beneficial to identify the employer using

a standard identifier.

A. Legislation

The Congress included provisions to

address the need for a standard

identifier and other administrative

simplification issues in the Health

Insurance Portability and

Accountability Act of 1996 (HIPAA),

Public Law 104–191, which was enacted

on August 21, 1996. Through subtitle F

of title II of that law, the Congress added

to title XI of the Social Security Act a

new part C, entitled ‘‘Administrative

Simplification.’’ (Public Law 104–191

affects several titles in the United States

Code. Hereafter, we refer to the Social

Security Act as the Act; we refer to the

other laws cited in this document by

their names.) The purpose of this part is

to improve the Medicare and Medicaid

programs in particular and the

efficiency and effectiveness of the

health care system in general by

encouraging the development of a

health information system through the

establishment of standards and

requirements to facilitate the electronic

transmission of certain health

information.

Part C of title XI consists of sections

1171 through 1179 of the Act. These

sections define various terms and

impose several requirements on HHS,

health plans, health care clearinghouses,

and certain health care providers

concerning electronic transmission of

health information.

The first section, section 1171 of the

Act, establishes definitions for purposes

of part C of title XI for the following

terms: code set, health care

clearinghouse, health care provider,

health information, health plan,

individually identifiable health

information, standard, and standard

setting organization.

Section 1172 of the Act makes any

standard adopted under part C

applicable to (1) all health plans, (2) all

health care clearinghouses, and (3) any

health care providers that transmit any

health information in electronic form in

connection with the transactions

referred to in section 1173(a)(1) of the

Act.
32786 Federal Register / Vol. 63, No. 115 /Tuesday, June 16, 1998 / Proposed Rules

This section also contains

requirements concerning standard

setting.

• The Secretary may adopt a standard

developed, adopted, or modified by a

standard setting organization (that is, an

organization accredited by the American

National Standards Institute (ANSI))

that has consulted with the National

Uniform Billing Committee (NUBC), the

National Uniform Claim Committee

(NUCC), the Workgroup on Electronic

Data Interchange (WEDI), and the

American Dental Association (ADA).

• The Secretary may also adopt a

standard other than one established by

a standard setting organization, if the

different standard will reduce costs for

health care providers and health plans,

the different standard is promulgated

through negotiated rulemaking

procedures, and the Secretary consults

with each of the above-named groups.

• If no standard has been adopted by

any standard setting organization, the

Secretary is to rely on the

recommendations of the National

Committee on Vital and Health

Statistics (NCVHS) and consult with

each of the above-named groups.

In complying with the requirements

of part C of title XI, the Secretary must

rely on the recommendations of the

NCVHS, consult with appropriate State,

Federal, and private agencies or

organizations, and publish the

recommendations of the NCVHS in the

Federal Register.

Paragraph (a) of section 1173 of the

Act requires that the Secretary adopt

standards for financial and

administrative transactions, and data

elements for those transactions, to

enable health information to be

exchanged electronically. Standards are

required for the following transactions:

health claims, health encounter

information, health claims attachments,

health plan enrollments and

disenrollments, health plan eligibility,

health care payment and remittance

advice, health plan premium payments,

first report of injury, health claim status,

and referral certification and

authorization. In addition, the Secretary

is required to adopt standards for any

other financial and administrative

transactions that are determined to be

appropriate by the Secretary.

Paragraph (b) of section 1173 of the

Act requires the Secretary to adopt

standards for unique health identifiers

for all individuals, employers, health

plans, and health care providers and

requires further that the adopted

standards specify for what purposes

unique health identifiers may be used.

Paragraphs (c) through (f) of section

1173 of the Act require the Secretary to

establish standards for code sets for

each data element for each health care

transaction listed above, security

standards for health care information

systems, standards for electronic

signatures (established together with the

Secretary of Commerce), and standards

for the transmission of data elements

needed for the coordination of benefits

and sequential processing of claims.

Compliance with electronic signature

standards will be deemed to satisfy both

State and Federal requirements for

written signatures with respect to the

transactions listed in paragraph (a) of

section 1173 of the Act.

In section 1174 of the Act, the

Secretary is required to adopt standards

for all of the above transactions, except

claims attachments, within 18 months

of enactment. The standards for claims

attachments must be adopted within 30

months. Generally, after a standard is

established it cannot be changed during

the first year except for changes that are

necessary to permit compliance with the

standard. Modifications to any of these

standards may be made after the first

year, but not more frequently than once

every 12 months. The Secretary must

also ensure that procedures exist for the

routine maintenance, testing,

enhancement, and expansion of code

sets and that there are crosswalks from

prior versions.

Section 1175 of the Act prohibits

health plans from refusing to process or

delaying the processing of a transaction

that is presented in standard format.

The Act’s requirements are not limited

to health plans; however, each person to

whom a standard or implementation

specification applies is required to

comply with the standard within 24

months (or 36 months for small health

plans) of its adoption. A health plan or

other entity may, of course, comply

voluntarily before the effective date.

Entities may comply by using a health

care clearinghouse to transmit or receive

the standard transactions. Compliance

with modifications and implementation

specifications to standards must be

accomplished by a date designated by

the Secretary. This date may not be

earlier than 180 days after the notice of

change.

Section 1176 of the Act establishes a

civil monetary penalty for violation of

the provisions in part C of title XI of the

Act, subject to several limitations. The

Secretary is required by statute to

impose penalties of not more than $100

per violation on any person who fails to

comply with a standard, except that the

total amount imposed on any one

person in each calendar year may not

exceed $25,000 for violations of one

requirement. The procedural provisions

in section 1128A of the Act, ‘‘Civil

Monetary Penalties,’’ are applicable.

Section 1177 of the Act establishes

penalties for a knowing misuse of

unique health identifiers and

individually identifiable health

information: (1) A fine of not more than

$50,000 and/or imprisonment of not

more than 1 year; (2) if misuse is ‘‘under

false pretenses,’’ a fine of not more than

$100,000 and/or imprisonment of not

more than 5 years; and (3) if misuse is

with intent to sell, transfer, or use

individually identifiable health

information for commercial advantage,

personal gain, or malicious harm, a fine

of not more than $250,000 and/or

imprisonment of not more than 10

years.

Under section 1178 of the Act, the

provisions of part C of title XI of the

Act, as well as any standards

established under them, supersede any

State law that is contrary to them.

However, the Secretary may, for

statutorily specified reasons, waive this

provision.

Finally, section 1179 of the Act makes

the above provisions inapplicable to

financial institutions or anyone acting

on behalf of a financial institution when

‘‘authorizing, processing, clearing,

settling, billing, transferring,

reconciling, or collecting payments for a

financial institution.’’ Although the

provisions of the law are inapplicable to

financial institutions when they are

carrying out the listed financial

functions, the provisions are applicable

to financial institutions when they

perform the functions of health care

clearinghouses.

Concerning this last provision, the

conference report, in its discussion on

section 1178, states:

The conferees do not intend to exclude the

activities of financial institutions or their

contractors from compliance with the

standards adopted under this part if such

activities would be subject to this part.

However, conferees intend that this part does

not apply to use or disclosure of information

when an individual utilizes a payment

system to make a payment for, or related to,

health plan premiums or health care. For

example, the exchange of information

between participants in a credit card system

in connection with processing a credit card

payment for health care would not be

covered by this part. Similarly sending a

checking account statement to an account

holder who uses a credit or debit card to pay

for health care services, would not be

covered by this part. However, this part does

apply if a company clears health care claims,

the health care claims activities remain

subject to the requirements of this part.’’)

(H.R. Rep. No. 736, 104th Cong., 2nd Sess.

(1996) reprinted in 1996 U.S.C.C.A.N. 264,

265)
Federal Register / Vol. 63, No. 115 /Tuesday, June 16, 1998 / Proposed Rules 32787

B. Process for Developing National

Standards

The Secretary has formulated a 5-part

strategy for developing and

implementing the standards mandated

under Part C of title XI of the Act:

1. To ensure necessary interagency

coordination and required interaction

with other Federal departments and the

private sector, establish

interdepartmental implementation

teams to identify and assess potential

standards for adoption. The subject

matter of the teams includes claims/

encounters, identifiers, enrollment/

eligibility, systems security, and

medical coding/classification. Another

team addresses cross-cutting issues and

coordinates the subject matter teams.

The teams consult with external groups

such as the NCVHS’ Workgroup on Data

Standards, WEDI, ANSI’s Healthcare

Informatics Standards Board, the NUCC,

the NUBC, and the ADA. The teams are

charged with developing regulations

and other necessary documents and

making recommendations for the

various standards to the HHS’ Data

Council through its Committee on

Health Data Standards. (The HHS Data

Council is the focal point for

consideration of data policy issues. It

reports directly to the Secretary and

advises the Secretary on data standards

and privacy issues.)

2. Develop recommendations for

standards to be adopted.

3. Publish proposed rules in the

Federal Register describing the

standards. Each proposed rule provides

the public with a 60-day comment

period.

4. Analyze public comments and

publish the final rules in the Federal

Register.

5. Distribute standards and coordinate

preparation and distribution of

implementation guides.

This strategy affords many

opportunities for involvement of

interested and affected parties in

standards development and adoption:

• Participate with standards

development organizations.

• Provide written input to the

NCVHS.

• Provide written input to the

Secretary of HHS.

• Provide testimony at NCVHS’

public meetings.

• Comment on the proposed rules for

each of the proposed standards.

• Invite HHS staff to meetings with

public and private sector organizations

or meet directly with senior HHS staff

involved in the implementation process.

The implementation teams charged

with reviewing standards for

designation as required national

standards under the statute have

defined, with significant input from the

health care industry, a set of principles

for guiding choices for the standards to

be adopted by the Secretary. These

principles are based on direct

specifications in HIPAA and the

purpose of the law, principles that

support the regulatory philosophy set

forth in Executive Order 12866 and the

Paperwork Reduction Act of 1995. To be

designated as an HIPAA standard, each

standard should:

1. Improve the efficiency and

effectiveness of the health care system

by leading to cost reductions for or

improvements in benefits from

electronic health care transactions.

2. Meet the needs of the health data

standards user community, particularly

health care providers, health plans, and

health care clearinghouses.

3. Be consistent and uniform with the

other HIPAA standards—their data

element definitions and codes and their

privacy and security requirements—

and, secondarily, with other private and

public sector health data standards.

4. Have low additional development

and implementation costs relative to the

benefits of using the standard.

5. Be supported by an ANSIaccredited standards developing

organization or other private or public

organization that will ensure continuity

and efficient updating of the standard

over time.

6. Have timely development, testing,

implementation, and updating

procedures to achieve administrative

simplification benefits faster.

7. Be technologically independent of

the computer platforms and

transmission protocols used in

electronic transactions, except when

they are explicitly part of the standard.

8. Be precise and unambiguous, but as

simple as possible.

9. Keep data collection and

paperwork burdens on users as low as

is feasible.

10. Incorporate flexibility to adapt

more easily to changes in the health care

infrastructure (such as new services,

organizations, and provider types) and

information technology.

A master data dictionary providing for

common data definitions across the

standards selected for implementation

under HIPAA will be developed and

maintained. We intend for the data

element definitions to be precise,

unambiguous, and consistently applied.

The transaction-specific reports and

general reports from the master data

dictionary will be readily available to

the public. At a minimum, the

information presented will include data

element names, definitions, and

appropriate references to the

transactions where they are used.

This proposed rule would establish

the standard health care employer

identifier. We anticipate publishing

several regulations documents

altogether to promulgate the various

standards required under the HIPAA.

The other proposed regulations cover

security standards, the transactions

specified in the Act, and the other three

identifiers.

II. Provisions of the Proposed

Regulations

[Please label written and e-mailed

comments about this section with the

subject: Provisions.]

In this proposed rule, we propose a

standard employer identifier and

requirements concerning its

implementation. This rule would

establish requirements that health plans,

health care clearinghouses, and health

care providers would have to meet to

comply with the statutory requirement

to use a unique employer identifier in

electronic transactions.

We propose to add a new part to title

45 of the Code of Federal Regulations

for health plans, health care providers,

and health care clearinghouses in

general. The new part would be part 142

of title 45 and would be titled

‘‘Administrative Requirements.’’

Subpart F would contain provisions

specific to the employer identifier.

A. Applicability

Section 262 of HIPAA applies to any

health plans, any health care

clearinghouses, and any health care

provider that transmits any health

information in electronic form in

connection with transactions referred to

in section 1173(a)(1) of the Act. Our

proposed rules (at 45 CFR 142.102)

would apply to the health plans and

health care clearinghouses as well, but

we would clarify the statutory language

in our regulations for health care

providers: we would have the

regulations apply to any health care

provider only when electronically

transmitting any of the transactions to

which section 1173(a)(1) of the Act

refers.

Electronic transmissions would

include transmissions using all media,

even when the transmission is

physically moved from one location to

another using magnetic tape, disk, or CD

media. Transmissions over the Internet

(wide-open), Extranet (using Internet

technology to link a business with

information only accessible to

collaborating parties), leased lines, dialup lines, and private networks are all
32788 Federal Register / Vol. 63, No. 115 /Tuesday, June 16, 1998 / Proposed Rules

included. Telephone voice response and

‘‘faxback’’ systems would not be

included. The ‘‘HTML’’ interaction

between a server and a browser by

which the elements of a transaction are

solicited from a user would not be

included, but once assembled into a

transaction by the server, transmission

of the full transaction to another

corporate entity, such as a health plan,

would be required to comply.

Our regulations would apply to health

care clearinghouses when transmitting

transactions to, and receiving

transactions from, a health care provider

or health plan that transmits and

receives standard transactions (as

defined under ‘‘transaction’’) and at all

times when transmitting to or receiving

electronic transactions from another

health care clearinghouse. The law

would apply to each health care

provider when transmitting or receiving

any electronic transaction.

The law applies to health plans for all

transactions.

Section 142.104 would contain the

following provisions (from section 1175

of the Act):

If a person desires to conduct a

transaction (as defined in § 142.103)

with a health plan as a standard

transaction, the following apply:

(1) The health plan may not refuse to

conduct the transaction as a standard

transaction.

(2) The health plan may not delay the

transaction or otherwise adversely

affect, or attempt to adversely affect, the

person or the transaction on the ground

that the transaction is a standard

transaction.

(3) The information transmitted and

received in connection with the

transaction must be in the form of

standard data elements of health

information.

As a further requirement, we would

require that a health plan that conducts

transactions through an agent assure

that the agent meets all the requirements

of part 142 that apply to the health plan.

Section 142.105 would state that a

person or other entity may meet the

requirements of § 142.104 by either—

(1) Transmitting and receiving

standard data elements, or

(2) Submitting nonstandard data

elements to a health care clearinghouse

for processing into standard data

elements and transmission by the health

care clearinghouse and receiving

standard data elements through the

clearinghouse.

Health care clearinghouses would be

able to accept nonstandard transactions

for the sole purpose of translating them

into standard transactions for sending

customers and would be able to accept

standard transactions and translate them

into nonstandard formats for receiving

customers. We would state in § 142.105

that the transmission of nonstandard

transactions, under contract, between a

health plan or a health care provider

and a health care clearinghouse would

not violate the law.

Transmissions within a corporate

entity would not be required to comply

with the standards. For example, a

hospital that is wholly owned by a

managed care company would not have

to use the standards to pass encounter

information back to the home office, but

it would have to use the standard claims

transaction to submit a claim to another

health plan.

Although there are situations in

which the use of the standards is not

required (for example, health care

providers may continue to submit paper

claims and employers are not required

to use any of the standard transactions),

we stress that a standard may be used

voluntarily in any situation in which it

is not required.

B. Definitions

Section 1171 of the Act defines

several terms and our proposed rules

would, for the most part, simply restate

the law. The terms that we are defining

in this proposed rule follow:

1. Code Set

We would define ‘‘code set’’ as

section 1171(1) of the Act does: ‘‘code

set’’ means any set of codes used for

encoding data elements, such as tables

of terms, medical concepts, medical

diagnostic codes, or medical procedure

codes.

2. Employer

We would define ‘‘employer’’ as 26

U.S.C. 3401(d) does: ‘‘employer’’ means

the person for whom an individual

performs or performed any service, of

whatever nature, as the employee of that

person or organization, except that:

a. If the person for whom the

individual performs or performed the

services does not have control of the

payment of wages for those services, the

term ‘‘employer’’ means the person

having control of the payment of those

wages; and

b. In the case of a person paying

wages on behalf of a nonresident alien

individual, foreign partnership, or

foreign corporation, not engaged in

trade or business within the United

States, the term ‘‘employer’’ means that

person.

3. Health Care Clearinghouse

We would define ‘‘health care

clearinghouse’’ as section 1171(2) of the

Act does, but we are adding a further,

clarifying sentence. The statute defines

a ‘‘health care clearinghouse’’ as a

public or private entity that processes or

facilitates the processing of nonstandard

data elements of health information into

standard data elements. We would

further explain that such an entity is

one that currently receives health care

transactions from health care providers

and other entities, translates the data

from a given format into one acceptable

to the intended recipient and forwards

the processed transaction to appropriate

health plans and other clearinghouses,

as necessary, for further action.

There are currently a number of

private clearinghouses that perform

these functions for health care

providers. For purposes of this rule, we

would consider billing services,

repricing companies, community health

management information systems or

community health information systems,

value-added networks, and switches

performing these functions to be health

care clearinghouses.

4. Health Care Provider

As defined by section 1171(3) of the

Act, a ‘‘health care provider’’ is a

provider of services as defined in

section 1861(u) of the Act, a provider of

medical or other health services as

defined in section 1861(s) of the Act,

and any other person who furnishes

health care services or supplies. Our

regulations would define ‘‘health care

provider’’ as the statute does and clarify

that the definition of a health care

provider is limited to those entities that

furnish, or bill and are paid for, health

care services in the normal course of

business.

For a more detailed discussion of the

definition of health care provider, we

refer the reader to our proposed rule,

HCFA–0045-P, Standard Health Care

Provider Identifier, published on May 7,

1998 (63 FR 25320).

5. Health Information

‘‘Health information,’’ as defined in

section 1171 of the Act, means any

information, whether oral or recorded in

any form or medium, that—

• Is created or received by a health

care provider, health plan, public health

authority, employer, life insurer, school

or university, or health care

clearinghouse; and

• Relates to the past, present, or

future physical or mental health or

condition of an individual; the

provision of health care to an

individual; or the past, present, or

future payment for the provision of

health care to an individual.
Federal Register / Vol. 63, No. 115 /Tuesday, June 16, 1998 / Proposed Rules 32789

We propose the same definition for

our regulations.

6. Health Plan

We propose that a ‘‘health plan’’ be

defined essentially as section 1171 of

the Act defines it. Section 1171 of the

Act cross refers to definitions in section

2791 of the Public Health Service Act

(as added by Public Law 104–191, 42

U.S.C. 300gg–91); we would incorporate

those definitions as currently stated into

our proposed definitions for the

convenience of the public. We note that

many of these terms are defined in other

statutes, such as the Employee

Retirement Income Security Act of 1974

(ERISA), Public Law 93–406, 29 U.S.C.

1002(7) and the Public Health Service

Act. Our definitions are based on the

roles of plans in conducting

administrative transactions, and any

differences should not be construed to

affect other statutes.

For purposes of implementing the

provisions of administrative

simplification, a ‘‘health plan’’ would be

an individual or group health plan that

provides, or pays the cost of, medical

care. This definition includes, but is not

limited to, the 13 types of plans listed

in the statute. On the other hand, plans

such as property and casualty insurance

plans and workers compensation plans,

which may pay health care costs in the

course of administering nonhealth care

benefits, are not considered to be health

plans in the proposed definition of

health plan. Of course, these plans may

voluntarily adopt these standards for

their own business needs. At some

future time, the Congress may choose to

expressly include some or all of these

plans in the list of health plans that

must comply with the standards.

Health plans often carry out their

business functions through agents, such

as plan administrators (including third

party administrators), entities that are

under ‘‘administrative services only’’

(ASO) contracts, claims processors, and

fiscal agents. These agents may or may

not be health plans in their own right;

for example, a health plan may act as

another health plan’s agent as another

line of business. As stated earlier, a

health plan that conducts HIPAA

transactions through an agent is

required to assure that the agent meets

all HIPAA requirements that apply to

the plan itself.

‘‘Health plan’’ includes the following,

singly or in combination:

a. ‘‘Group health plan’’ (as currently

defined by section 2791(a) of the Public

Health Service Act). A group health

plan is a plan that has 50 or more

participants (as the term ‘‘participant’’ is

currently defined by section 3(7) of

ERISA) or is administered by an entity

other than the employer that established

and maintains the plan. This definition

includes both insured and self-insured

plans. We define ‘‘participant’’

separately below.

Section 2791(a)(1) of the Public

Health Service Act defines ‘‘group

health plan’’ as an employee welfare

benefit plan (as currently defined in

section 3(1) of ERISA) to the extent that

the plan provides medical care,

including items and services paid for as

medical care, to employees or their

dependents directly or through

insurance, or otherwise.

It should be noted that group health

plans that have fewer than 50

participants and that are administered

by the employer would be excluded

from this definition and would not be

subject to the administrative

simplification provisions of HIPAA.

b. ‘‘Health insurance issuer’’ (as

currently defined by section 2791(b) of

the Public Health Service Act).

Section 2791(b)(2) of the Public

Health Service Act currently defines a

‘‘health insurance issuer’’ as an

insurance company, insurance service,

or insurance organization that is

licensed to engage in the business of

insurance in a State and is subject to

State law that regulates insurance.

c. ‘‘Health maintenance organization’’

(as currently defined by section 2791(b)

of the Public Health Service Act).

Section 2791(b) of the Public Health

Service Act currently defines a ‘‘health

maintenance organization’’ as a

Federally qualified health maintenance

organization, an organization recognized

as such under State law, or a similar

organization regulated for solvency

under State law in the same manner and

to the same extent as such a health

maintenance organization. These

organizations may include preferred

provider organizations, provider

sponsored organizations, independent

practice associations, competitive

medical plans, exclusive provider

organizations, and foundations for

medical care.

d. Part A or Part B of the Medicare

program (title XVIII of the Act).

e. The Medicaid program (title XIX of

the Act).

f. A ‘‘Medicare supplemental policy’’

as defined under section 1882(g)(1) of

the Act.

Section 1882(g)(1) of the Act defines

a ‘‘Medicare supplemental policy’’ as a

health insurance policy that a private

entity offers a Medicare beneficiary to

provide payment for expenses incurred

for services and items that are not

reimbursed by Medicare because of

deductible, coinsurance, or other

limitations under Medicare. The

statutory definition of a Medicare

supplemental policy excludes a number

of plans that are generally considered to

be Medicare supplemental plans, such

as health plans for employees and

former employees and for members and

former members of trade associations

and unions. A number of these health

plans may be included under the

definitions of ‘‘group health plan’’ or

‘‘health insurance issuer’’, as defined in

a. and b. above.

g. A ‘‘long-term care policy,’’

including a nursing home fixedindemnity policy. A ‘‘long-term care

policy’’ is considered to be a health plan

regardless of how comprehensive it is.

We recognize the long-term care

insurance segment of the industry is

largely unautomated and we welcome

comments regarding the impact of

HIPAA on the long-term care segment.

h. An employee welfare benefit plan

or any other arrangement that is

established or maintained for the

purpose of offering or providing health

benefits to the employees of two or more

employers. This includes plans and

other arrangements that are referred to

as multiple employer welfare

arrangements (‘‘MEWAs’’) as defined in

section 3(40) of ERISA.

i. The health care program for active

military personnel under title 10 of the

United States Code.

j. The veterans health care program

under chapter 17 of title 38 of the

United States Code.

This health plan primarily furnishes

medical care through hospitals and

clinics administered by the Department

of Veterans Affairs for veterans with a

service-connected disability that is

compensable. Veterans with nonservice-connected disabilities (and no

other health benefit plan) may receive

health care under this health plan to the

extent resources and facilities are

available.

k. The Civilian Health and Medical

Program of the Uniformed Services

(CHAMPUS), as defined in 10 U.S.C.

1072(4).

CHAMPUS primarily covers services

furnished by civilian medical providers

to dependents of active duty members of

the uniformed services and retirees and

their dependents under age 65.

l. The Indian Health Service program

under the Indian Health Care

Improvement Act (25 U.S.C. 1601 et

seq.).

This program furnishes services,

generally through its own health care

providers, primarily to persons who are

eligible to receive services because they

are of American Indian or Alaskan

Native descent.
32790 Federal Register / Vol. 63, No. 115 /Tuesday, June 16, 1998 / Proposed Rules

m. The Federal Employees Health

Benefits Program under 5 U.S.C. chapter

89.

This program consists of health

insurance plans offered to active and

retired Federal employees and their

dependents. Depending on the health

plan, the services may be furnished on

a fee-for-service basis or through a

health maintenance organization.

(Note: Although section 1171(5)(M) of the

Act refers to the ‘‘Federal Employees Health

Benefit Plan,’’ this and any other rules

adopting administrative simplification

standards will use the correct name, the

Federal Employees Health Benefits Program.

One health plan does not cover all Federal

employees; there are over 350 health plans

that provide health benefits coverage to

Federal employees, retirees, and their eligible

family members. Therefore, we will use the

correct name, the Federal Employees Health

Benefits Program, to make clear that the

administrative simplification standards apply

to all health plans that participate in the

Program.)

n. Any other individual or group

health plan, or combination thereof, that

provides or pays for the cost of medical

care.

We would include a fourteenth

category of health plan in addition to

those specifically named in HIPAA, as

there are health plans that do not

readily fit into the other categories but

whose major purpose is providing

health benefits. The Secretary would

determine which of these plans are

health plans for purposes of title II of

HIPAA. This category would include

the Medicare Plus Choice plans that will

become available as a result of section

1855 of the Act as amended by section

4001 of the Balanced Budget Act of 1997

(Public Law 105–33) to the extent that

these health plans do not fall under any

other category.

7. Medical Care

‘‘Medical care,’’ which is used in the

definition of health plan, would be

defined as current section 2791 of the

Public Health Service Act defines it: the

diagnosis, cure, mitigation, treatment, or

prevention of disease, or amounts paid

for the purpose of affecting any body

structure or function of the body;

amounts paid for transportation

primarily for and essential to these

items; and amounts paid for insurance

covering the items and the

transportation specified in this

definition.

8. Participant

We would define the term

‘‘participant’’ as section 3(7) of ERISA

currently defines it: a ‘‘participant’’ is

any employee or former employee of an

employer, or any member or former

member of an employee organization,

who is or may become eligible to receive

a benefit of any type from an employee

benefit plan that covers employees of

such an employer or members of such

an organization, or whose beneficiaries

may be eligible to receive any of these

benefits. An ‘‘employee’’ would include

an individual who is treated as an

employee under section 401(c)(1) of the

Internal Revenue Code of 1986 (26

U.S.C. 401(c)(1)).

9. Small Health Plan

We would define a ‘‘small health

plan’’ as a group health plan or

individual health plan with fewer than

50 participants.

The HIPAA does not define a ‘‘small

health plan’’ but instead leaves the

definition to be determined by the

Secretary. The Conference Report

suggests that the appropriate definition

of a ‘‘small health plan’’ is found in

current section 2791(a) of the Public

Health Service Act, which is a group

health plan with fewer than 50

participants. We would also define

small individual health plans as those

with fewer than 50 participants.

10. Standard

Section 1171 of the Act defines

‘‘standard,’’ when used with reference

to a data element of health information

or a transaction referred to in section

1173(a)(1) of the Act, as any such data

element or transaction that meets each

of the standards and implementation

specifications adopted or established by

the Secretary with respect to the data

element or transaction under sections

1172 through 1174 of the Act.

Under our definition, a standard

would be a set of rules for a set of codes,

data elements, transactions, or

identifiers promulgated either by an

organization accredited by the American

National Standards Institute or HHS for

the electronic transmission of health

information.

11. Transaction

‘‘Transaction’’ would mean the

exchange of information between two

parties to carry out financial and

administrative activities related to

health care. A transaction would be any

of the transactions listed in section

1173(a)(2) of the Act and any

determined appropriate by the Secretary

in accordance with section 1173(a)(1)(B)

of the Act. We present them below in

the order in which we propose to list

them in the regulations text to

thisdocument and in the regulations

document for proposed standards for

these transactions that we will publish

later.

A ‘‘transaction’’ would mean any of

the following:

a. Health claims or equivalent

encounter information. This transaction

may be used to submit health care claim

billing information, encounter

information, or both, from health care

providers to health plans, either directly

or via intermediary billers and claims

clearinghouses.

b. Health care payment and

remittance advice. This transaction may

be used by a health plan to make a

payment to a financial institution for a

health care provider (sending payment

only), to send an explanation of benefits

or a remittance advice directly to a

health care provider (sending data only),

or to make payment and send an

explanation of benefits remittance

advice to a health care provider via a

financial institution (sending both

payment and data).

c. Coordination of benefits. This

transaction can be used to transmit

health care claims and billing payment

information between health plans with

different payment responsibilities where

coordination of benefits is required or

between health plans and regulatory

agencies to monitor the rendering,

billing, and/or payment of health care

services within a specific health care/

insurance industry segment.

In addition to the nine electronic

transactions specified in section

1173(a)(2) of the Act, section 1173(f)

directs the Secretary to adopt standards

for transferring standard data elements

among health plans for coordination of

benefits and sequential processing of

claims. This particular provision does

not state that these should be standards

for electronic transfer of standard data

elements among health plans. However,

we believe that the Congress, when

writing this provision, intended for

these standards to apply to the

electronic form of transactions for

coordination of benefits and sequential

processing of claims. The Congress

expressed its intent on these matters

generally in section 1173(a)(1)(B), where

the Secretary is directed to adopt ‘‘other

financial and administrative

transactions . . . consistent with the

goals of improving the operation of the

health care system and reducing

administrative costs’’. Adoption of a

standard for electronic transmission of

standard data elements among health

plans for coordination of benefits and

sequential processing of claims would

serve these goals expressed by the

Congress.
Federal Register / Vol. 63, No. 115 /Tuesday, June 16, 1998 / Proposed Rules 32791

d. Health claim status. This

transaction may be used by health care

providers and recipients of health care

products or services (or their authorized

agents) to request the status of a health

care claim or encounter from a health

plan.

e. Enrollment and disenrollment in a

health plan. This transaction may be

used to establish communication

between the sponsor of a health benefit

and the health plan. It provides

enrollment data, such as subscriber and

dependents, employer information, and

primary care health care provider

information. The sponsor is the backer

of the coverage, benefit, or product. A

sponsor can be an employer, union,

government agency, association, or

insurance company. The health plan

refers to an entity that pays claims,

administers the insurance product or

benefit, or both.

f. Eligibility for a health plan. This

transaction may be used to inquire

about the eligibility, coverage, or

benefits associated with a benefit plan,

employer, plan sponsor, subscriber, or a

dependent under the subscriber’s

policy. It also can be used to

communicate information about or

changes to eligibility, coverage, or

benefits from information sources (such

as insurers, sponsors, and health plans)

to information receivers (such as

physicians, hospitals, third party

administrators, and government

agencies).

g. Health plan premium payments.

This transaction may be used by, for

example, employers, employees, unions,

and associations to make and keep track

of payments of health plan premiums to

their health insurers. This transaction

may also be used by a health care

provider, acting as liaison for the

beneficiary, to make payment to a health

insurer for coinsurance, copayments,

and deductibles.

h. Referral certification and

authorization. This transaction may be

used to transmit health care service

referral information between primary

care health care providers, health care

providers furnishing services, and

health plans. It can also be used to

obtain authorization for certain health

care services from a health plan.

i. First report of injury. This

transaction may be used to report

information pertaining to an injury,

illness, or incident to entities interested

in the information for statistical, legal,

claims, and risk management processing

requirements.

j. Health claims attachments. This

transaction may be used to transmit

health care service information, such as

subscriber, patient, demographic,

diagnosis, or treatment data for the

purpose of a request for review,

certification, notification, or reporting

the outcome of a health care services

review.

k. Other transactions as the Secretary

may prescribe by regulation. Under

section 1173(a)(1)(B) of the Act, the

Secretary shall adopt standards, and

data elements for those standards, for

other financial and administrative

transactions deemed appropriate by the

Secretary. These transactions would be

consistent with the goals of improving

the operation of the health care system

and reducing administrative costs.

C. Effective Dates—General

In general, any given standard would

be effective 24 months after the effective

date (36 months for small health plans)

of the final rule for that standard.

Because there are other standards to be

established than those in this proposed

rule, we specify the date for a given

standard under the subpart for that

standard.

If HHS adopts a modification to an

implementation specification or a

standard, the implementation date of

the modification would be no earlier

than the 180th day following the

adoption of the modification. HHS

would determine the actual date, taking

into account the time needed to comply

due to the nature and extent of the

modification. HHS would be able to

extend the time for compliance for small

health plans. This provision would be at

§ 142.106.

The law does not address scheduling

of implementation of the standards; it

gives only a date by which all

concerned must comply. As a result,

any of the health plans, health care

clearinghouses, and health care

providers may implement a given

standard earlier than the date specified

in the subpart created for that standard.

We realize that this may create some

problems temporarily, as early

implementers would have to be able to

continue using old standards until the

new ones must, by law, be in place.

At the WEDI Healthcare Leadership

Summit held on August 15, 1997, it was

recommended that health care providers

not be required to use any of the

standards during the first year after the

adoption of the standard. However,

willing trading partners could

implement any or all of the standards by

mutual agreement at any time during

the 2-year implementation phase (3-year

implementation phase for small health

plans). In addition, it was recommended

that a health plan give its health care

providers at least 6 months notice before

requiring them to use a given standard.

We welcome comments specifically

on early implementation as to the extent

to which it would cause problems and

how any problems might be alleviated.

D. Employer Identifier Standard

[Please label written and e-mailed

comments about this section with the

subject: EIN STANDARD.]

Section 142.602, Employer identifier

standard, would contain the employer

identifier standard. There is no

recognized standard for employer

identification as defined in the law.

That is, there is no standard that has

been developed, adopted, or modified

by a standard setting organization after

consultation with the National Uniform

Billing Committee, the National

Uniform Claim Committee, WEDI, and

the American Dental Association.

Therefore, we would designate a new

standard.

We are proposing as the standard the

employer identification number (EIN),

which is assigned by the Internal

Revenue Service (IRS), Department of

the Treasury.

The EIN is defined in 26 CFR

301.7701–12. We would define

‘‘Employer identification number’’ (EIN)

as 26 CFR 301.7701–12 does: ‘‘Employer

identification number’’ is the taxpayer

identifying number of an individual or

other person (whether or not an

employer) that is assigned pursuant to

26 U.S.C. 6011(b) or corresponding

provisions of prior law, or pursuant to

26 U.S.C. 6109, and in which nine digits

are separated by a hyphen, as follows:

00-0000000.

1. Selection Criteria

The implementation team used the

criteria described in section I.B., Process

for Developing National Standards, to

evaluate the EIN as a candidate for the

employer identifier standard.

Criteria #1, #2, #4, and #6—The team

found that the EIN met these criteria in

that it is a nationally defined and

assigned employer identifier and is the

most widely used employer identifier in

the United States.

Criteria #3 and #5—The team found

that the EIN met these criteria in that it

is an identifier that is already in use in

the Accredited Standards Committee

(ASC) X12N Insurance Subcommittee

electronic transactions that require an

employer identifier, including the

transactions used for the Health Claim,

Enrollment and Disenrollment in a

Health Plan, Eligibility for a Health

Plan, and Health Plan Premium

Payment.

Criterion #7—The team found that the

EIN met criterion #7 in that it is

technologically independent of
32792 Federal Register / Vol. 63, No. 115 /Tuesday, June 16, 1998 / Proposed Rules

computer platforms and transmission

protocols.

Criterion #8—The team found that the

EIN met criterion #8 in that it is a

relatively short identifier that would fit

into many existing formats.

Criterion #9—The team found that the

EIN met criterion #9 in that it is an

identifier already assigned to each

employer for tax identification

purposes. Its adoption as a standard

would not result in additional data

collection or paperwork burdens on

users.

Criterion #10—The team found that

the EIN met criterion #10 in that it is

flexible enough to identify any

employer, regardless of services,

organization, or provider type.

2. Other Identifiers

We initially considered whether the

PAYERID, the 9 position numeric

identifier developed by HCFA as the

unique identifier for health plans, could

be used as the employer identifier.

Since all employers are already

enumerated by EIN, an entirely new

employer identifier would require

everyone to convert to a new identifier

in addition to the EIN, which would

still be used. Another key drawback to

the use of the PAYERID as the employer

identifier is the fact that the PAYERID

numbering scheme does not have

sufficient numbers available to

enumerate all health plans and all

employers. In addition, PAYERID’s data

capabilities were developed based on

the data requirements for health plans,

which are not the same as those for

employers. Based on these limitations,

the team believed that the PAYERID

would not meet criteria #1, #2, #4, #9,

and #10 and would not be acceptable as

a candidate for the employer identifier.

The EIN is the most widely used

employer identifier in the claim,

enrollment and disenrollment for a

health plan, eligibility for a health plan

and health plan premium payment

transactions. The D–U–N–S number and

the D–U–N–S+4 number, maintained by

Dun & Bradstreet, are sometimes used to

identify business entities including

employers in these transactions

(primarily in premium payment

transactions), but the EIN is used to a far

greater extent than any other identifier

to identify the employer of a participant.

Since the D–U–N–S and D–U–N–S+4

numbers were not widely used in the

claim, the enrollment and disenrollment

in a health plan, and the eligibility for

a health plan transactions, the team

believed that these numbers did not

meet criteria #1, #2, #4, and #9 and were

less appropriate than the EIN as

candidates for the employer identifier.

Because of the widespread use of the

EIN to identify the employer in health

transactions, we selected the EIN as the

national employer identifier standard

for use in those electronic health

transactions that require an employer

identifier.

Since the IRS is responsible for

issuing the EIN, we consulted with the

IRS on the legality and feasibility of

using the EIN as the standard employer

identifier for electronic health

transactions. On September 11, 1997,

we forwarded our request for IRS

concurrence, and on January 16, 1998,

IRS concurred.

Although the EIN is not confidential,

some employers may not wish to supply

the EIN because it is their tax

identifying number. We welcome

comments on this issue and on any

other possible problems that the use of

the EIN would cause for employers or

others who would need to obtain and

use the EIN in their electronic health

transactions.

E. Requirements

[Please label written and e-mailed

comments about this section with the

subject: Requirements]

We note that the law does not bind

employers to use the standard.

However, providers, health plans, and

health care clearinghouses are bound to

use the standard in electronic health

transactions. Any individual or other

entity that needs to know an employer’s

EIN for use in electronic health

transactions would obtain it directly

from the employer. The EIN is not

considered confidential and it may be

freely used and exchanged by employers

and others.

1. Health Plans

In § 142.604, Requirements: Health

plans, we would require health plans to

accept the EIN on all electronic

transactions and transmit the EIN on all

electronic transactions that require an

employer identifier. Federal agencies

and States may place additional

requirements on their health plans.

2. Health care clearinghouses

We would require in § 142.606 that

each health care clearinghouse use the

EIN on all electronic transactions that

require an employer identifier.

3. Health care providers

In § 142.608, Requirements: Health

care providers, we would require each

health care provider to use the EIN on

all transactions, wherever required, that

are electronically transmitted.

4. Employers

In § 142.610, Requirements:

Employers, we would require each

employer to disclose its EIN, when

requested, to any entity that conducts

standard electronic transactions that

require that employer’s identifier.

We believe the authority to require

employers to disclose their EINs to

entities that are required to use these

numbers in electronic health care

transactions is implicit in the statutory

directive to the Secretary to adopt an

employer identification number for use

in the health care system. We note that

we have been unable to identify any

reason for an employer to refuse to

furnish the number to an entity that

conducts electronic health care

transactions since the EIN, unlike the

social security number, is not

information about a person. We note too

that access to the EIN does not give

access to specific tax information.

F. Effective Dates of the Employer

Identifier

Health plans would be required to

comply with our requirements as

follows:

1. Each health plan that is not a small

health plan would have to comply with

the requirements of §§ 142.104 and

142.604 no later than 24 months after

publication of the final rule.

2. Each small health plan would have

to comply with the requirements of

§§ 142.104 and 142.604 no later than 36

months after the date of publication of

the final rule.

3. If HHS adopts a modification to a

standard or implementation

specification, the implementation date

of the modification would be no earlier

than the 180th day following the

adoption of the modification. HHS

would determine the actual date, taking

into account the time needed to comply

due to the nature and extent of the

modification. HHS would be able to

extend the time for compliance for small

health plans.

Failure to comply with standards may

well result in monetary penalties. The

Secretary is required by statute to

impose penalties of not more than $100

per violation on any person who fails to

comply with a standard, except that the

total amount imposed on any one

person in each calendar year may not

exceed $25,000 for violations of one

requirement. We will propose

enforcement procedures in a future

Federal Register document once the

industry has more experience with

using the standards.
Federal Register / Vol. 63, No. 115 /Tuesday, June 16, 1998 / Proposed Rules 32793

III. Implementation of the Employer

Identification Standard

[Please label written and e-mailed

comments about this section with the

subject: Implementation]

A. Obtaining an EIN

The Internal Revenue Service

maintains the process for assigning

EINs. A business can obtain an EIN by

submitting, to the Internal Revenue

Service, Internal Revenue Service Form

SS–4, Application for Employer

Identification Number. Any business

that pays wages to one or more

employees is required to have an EIN as

its tax identifying number. A sole

proprietor who has no employees and

who files no excise or pension tax

returns is the only business person who

does not need to have an EIN as the tax

identifying number. We believe that

there would be few, if any, employers

that would not have an EIN for tax

identifying purposes.

The EIN is currently the employer

identifier in most widespread use in the

health claim, the enrollment and

disenrollment in a health plan, the

eligibility for a health plan, and the

health plan premium payment

transactions. If they conduct

administrative health transactions

electronically, health care providers,

health care clearinghouses, and health

plans would have to obtain and use the

EIN on all electronic transactions that

require an employer identifier.

Employers are not required by subtitle

F of HIPAA to use the EIN or conduct

standard electronic health transactions.

However, we believe that many

employers will find that it will be to

their advantage and will choose to do

so.

B. Organizations with Multiple EINs

We are aware that some organizations

have more than one EIN. We seek

comment from the public on whether it

is important, in order to avoid confusion

and achieve administrative

simplification, that one of these EINs be

used consistently in health transactions.

If use of one EIN is desirable, how

should it be chosen?

C. Approved Uses

Two years after adoption of this

standard (3 years for small health plans)

the EIN must be used as the employer

identifier in the health-related financial

and administrative transactions

identified in section 1173(a) that require

an employer identifier. The approved

uses of the EIN are detailed in 26 U.S.C.

6109 (i.e., income tax purposes and for

purposes of implementing certain

provisions of the Food Stamp Act of

1977 and the Federal Crop Insurance

Act). It may not be used in any activity

otherwise prohibited by law. The use of

the EIN for the purposes specified in

this proposed rule is covered under the

current approved uses for the EIN.

Examples of approved uses included

in this proposed rule are:

• Health care providers submitting

health claims to health plans

electronically would use the EIN to

identify the employers of the

participants in the health plan.

• Employers would use their EINs to

identify themselves in electronic

transactions making health plan

premium payments to health plans on

behalf of their employees.

• Employers and health care

providers would use the EIN to identify

the employer as the source or receiver

of information about eligibility.

• Employers would use their EINs to

identify themselves in electronic

transactions to enroll or disenroll their

employees in a health plan.

IV. New and Revised Standards

[Please label written and e-mailed

comments about this section with the

subject: Revisions.]

To encourage innovation and promote

development, we intend to develop a

process that would allow an

organization to request a revision or

replacement to any adopted standard or

standards.

An organization could request a

revision or replacement to an adopted

standard by requesting a waiver from

the Secretary of Health and Human

Services to test a revised or new

standard. The organization must, at a

minimum, demonstrate that the revised

or new standard offers an improvement

over the adopted standard. If the

organization presents sufficient

documentation that supports testing of a

revised or new standard, we want to be

able to grant the organization a

temporary waiver to test while

remaining in compliance with the law.

The waiver would be applicable to

standards that could change over time;

for example, transaction standards. We

do not intend to establish a process that

would allow an organization to avoid

using any adopted standard.

We would welcome comments on the

following: (1) How we should establish

this process, (2) the length of time a

proposed standard should be tested

before we decide whether to adopt it, (3)

whether we should solicit public

comments before implementing a

change in a standard, and (4) other

issues and recommendations we should

consider in developing this process.

Following is one possible process:

• Any organization that wishes to

revise or replace an adopted standard

must submit its waiver request to an

HHS evaluation committee (not

currently established or defined). The

organization must do the following for

each standard it wishes to revise or

replace:

+ Provide a detailed explanation, no

more than 10 pages in length, of how

the revision or replacement would be a

clear improvement over the current

standard in terms of the principles

listed in section I.B., Process for

developing national standards, of this

preamble.

+ Provide specifications and

technical capabilities on the revised or

new standard, including any additional

system requirements.

+ An explanation, no more than 5

pages in length, of how the organization

intends to test the standard.

• The committee’s evaluation would,

at a minimum, be based on the

following:

+ A cost-benefit analysis.

+ An assessment of whether the

proposed revision or replacement

demonstrates a clear improvement to an

existing standard.

+ The extent and length of time of the

waiver.

• The evaluation committee would

inform the organization requesting the

waiver within 30 working days of the

committee’s decision on the waiver

request. If the committee decides to

grant a waiver, the notification may

include the following:

+ Committee comments such as the

following:

¥ The length of time for which the

waiver applies if it differs from the

waiver request.

¥ The sites the committee believes

are appropriate for testing if they differ

from the waiver request.

¥ Any pertinent information

regarding the conditions of an approved

waiver.

• Any organization that receives a

waiver would be required to submit a

report containing the results of the

study, no later than 3 months after the

study is completed.

• The committee would evaluate the

report and determine whether the

benefits of the proposed revision or new

standard significantly outweigh the

disadvantages of implementing it and

make a recommendation to the

Secretary.

V. Collection of Information

Requirements

Under the Paperwork Reduction Act

of 1995, we are required to provide 60-

day notice in the Federal Register and
32794 Federal Register / Vol. 63, No. 115 /Tuesday, June 16, 1998 / Proposed Rules

solicit public comment before a

collection of information requirement is

submitted to the Office of Management

and Budget (OMB) for review and

approval. In order to fairly evaluate

whether an information collection

should be approved by OMB, section

3506(c)(2)(A) of the Paperwork

Reduction Act of 1995 requires that we

solicit comment on the following issues:

• The need for the information

collection and its usefulness in carrying

out the proper functions of our agency.

• The accuracy of our estimate of the

information collection burden.

• The quality, utility, and clarity of

the information to be collected.

• Recommendations to minimize the

information collection burden on the

affected public, including automated

collection techniques.

Section 142.604 Requirements: Health

plans

Health plans would be required to

accept the EIN on all electronic

transactions and transmit the EIN on all

electronic transmissions that require an

employer identifier.

Section 3142.608 Requirements:

Health care providers

Each health care provider would be

required to obtain and use the EIN of the

employer on all electronically

transmitted standard transactions that

require it.

Section 142.610 Requirements:

Employers.

Each employer would have to disclose

its EIN, when requested, to any entity

that conducts standard electronic

transactions that require that employer’s

identifier.

Discussion

The emerging and increasing use of

health care EDI standards and

transactions raises the issue of the

applicability of the PRA. The question

arises whether a regulation that adopts

an EDI standard used to exchange

certain information constitutes an

information collection subject to the

PRA. However, for the purpose of

soliciting useful public comment we

provide the following burden estimates.

In particular, the initial burden on the

estimated 4 million health plans and 1.2

million health care providers to modify

their current computer systems software

would be 2 hours/$60 per entity, for a

total burden of 10.4 million hours/$312

million. While this burden estimate may

appear low, on average, we believe it to

be accurate. This is based on the

assumption that these and the other

burden calculations associated with

HIPAA administrative simplification

systems modifications may overlap and

is also based on the overwhelming

extent to which the EIN is already in use

in the health care community. This

average also takes into consideration

that (1) this standard may not be used

by several of the entities included in the

estimate, (2) this standard may already

be in use by several of the entities

included in the estimate, (3)

modifications may be performed in an

aggregate manner during the course of

routine business and/or, (4)

modifications may be made by

contractors, such as practice

management vendors, in a single effort

for a multitude of affected entities.

We invite public comment on the

issues discussed above. If you comment

on these information collection and

recordkeeping requirements, please email comments to JBurke1@hcfa.gov

(Attn:HCFA–0047) or mail copies

directly to the following:

Health Care Financing Administration,

Office of Information Services,

Information Technology Investment

Management Group, Division of

HCFA Enterprise Standards, Room

C2–26–17, 7500 Security Boulevard,

Baltimore, MD 21244–1850 Attn: John

Burke HCFA–0047, HCFA Reports

Clearance Officer

And,

Office of Information and Regulatory

Affairs, Office of Management and

Budget, Room 10235, New Executive

Office Building, Washington, DC

20503, Attn: Allison Herron Eydt,

HCFA Desk Officer.

VI. Response to Comments

Because of the large number of items

of correspondence we normally receive

on Federal Register documents

published for comment, we are not able

to acknowledge or respond to them

individually. We will consider all

comments we receive by the date and

time specified in the DATES section of

this preamble, and, if we proceed with

a subsequent document, we will

respond to the comments in the

preamble to that document.

VII. Impact Analysis

As the effect of any one standard is

affected by the implementation of other

standards, it can be misleading to

discuss the impact of one standard by

itself. Therefore, we did an impact

analysis on the total effect of all the

standards in the proposed rule

concerning the national provider

identifier (HCFA–0045–P), which can be

found at 63 FR 25320.

We intend to publish in each

proposed rule an impact analysis that is

specific to the standard or standards

proposed in that rule, but the impact

analysis will assess only the relative

cost impact of implementing a given

standard. As stated in the general

impact analysis in HCFA–0045–P, we

do not intend to associate costs and

savings to specific standards.

Although we cannot determine the

specific economic impact of the

standard being proposed in this rule

(and individually each standard may

not have a significant impact), the

overall impact analysis makes clear that,

collectively, all the standards will have

a significant impact of over $100 million

on the economy. Also, while each

standard may not have a significant

impact on a substantial number of small

entities, the combined effects of all the

proposed standards may have a

significant effect on a substantial

number of small entities. Therefore, the

following impact analysis should be

read in conjunction with the overall

impact analysis.

Unfunded Mandates

This proposed rule has been reviewed

in accordance with the Unfunded

Mandates Reform Act of 1995 (UMRA)

(2 U.S.C. 1501 et seq.) and Executive

Order 12875. As discussed in the

combined impact analysis to which we

refer above (see 63 FR 25320), HHS

estimates that implementation of the

standards will require the expenditure

of more than $100 million by the private

sector. Therefore, the rule establishes a

Federal private sector mandate and is a

significant regulatory action within the

meaning of section 202 of UMRA (2

U.S.C. 1532). HHS has included this

statement to address the anticipated

effects of the proposed rules pursuant to

section 202.

These standards also apply to State

and local governments in their roles as

health plans or health care providers.

Thus, the proposed rules impose

unfunded mandates on these entities.

While we do not have sufficient

information to provide estimates of

these impacts, several State Medicaid

agencies have estimated that it would

cost $1 million per State or territory to

implement all of the HIPAA standards.

However, the costs that these standards

impose on these entities are well below

the UMRA section threshold that will

require additional analysis and

consultation; the Congressional Budget

Office analysis stated that ‘‘States are

already in the forefront in administering

the Medicaid program electronically;

the only costs—which should not be

significant—would involve bringing the

software and computer systems for the
Federal Register / Vol. 63, No. 115 /Tuesday, June 16, 1998 / Proposed Rules 32795

Medicaid programs into compliance

with the new standards.’’

The anticipated benefits and costs of

this proposed standard, and other issues

raised in section 202 of the UMRA, are

addressed in the analysis below and in

the combined impact analysis. In

addition, pursuant to section 205 of the

UMRA (2 U.S.C. 1535), having

considered a reasonable number of

alternatives as outlined in the preamble

to this rule and in the following

analysis, HHS has concluded that the

rule is the most cost-effective alternative

for implementation of HHS’s statutory

objective of administrative

simplification.

Executive Order 12866

In accordance with the provisions of

Executive Order 12866, this proposed

rule was reviewed by the Office of

Management and Budget.

Specific Impact of Employer Identifier

This is the portion of the impact

analysis that relates specifically to the

standard that is the subject of this

regulation—the employer identifier.

This section describes specific impacts

that relate to the employer identifier.

However, as we indicated in the

introduction to this impact analysis, we

do not intend to associate costs and

savings to specific standards.

1. Affected Entities

a. Health Care Providers

Health care providers that conduct

electronic transactions with health

plans would have to obtain and use the

EIN to identify the employer in those

electronic transactions that require an

employer identifier. In most cases

health care providers currently obtain

and use the EIN of the employer in

those transactions that require an

employer identifier. Any negative

impact on health care providers

generally would be related to the initial

implementation period for providers

that currently use an identifier other

than the EIN to identify the employer in

electronic transactions. They would

incur implementation costs for

converting systems from other employer

identifiers to the EIN. Some health care

providers would incur those costs

directly and others would incur them in

the form of fee increases from billing

agents and health care clearinghouses.

b. Health Care Plans

Health care plans that engage in

electronic commerce would have to

modify their systems to use the EIN if

they do not currently use the EIN to

identify the employer in electronic

transactions that require an employer

identifier. In most cases health care

plans currently obtain and use the EIN

of the employer in those transactions

that require an employer identifier. The

conversion for health plans currently

using an employer identifier other than

the EIN would have a one-time cost

impact.

c. Health Care Clearinghouses

Health care clearinghouses would

have to modify their systems to transmit

the EIN if they do not currently use the

EIN to identify the employer in

electronic transactions that require an

employer identifier. In most cases

health care clearinghouses currently

obtain and use the EIN of the employer

in those transactions that require an

employer identifier. The conversion for

health care clearinghouses currently

using an employer identifier other than

the EIN would have a one-time cost

impact.

d. Employers

Each employer would have to disclose

its EIN, when requested, to any entity

that conducts standard electronic

transactions that require the employer’s

identifier. Entities that conduct

electronic transactions that require an

employer identifier commonly obtain

that identifier from the employer as a

normal business practice. This practice

would not change. Any impact on

employers would be the one-time

impact to disclose the EIN to entities

that have previously used a different

identifier for that individual.

2. Effects of Various Options

a. Guiding Principles for Standard

Selection

The implementation teams charged

with designating standards under the

statute have defined, with significant

input from the health care industry, a

set of common criteria for evaluating

potential standards. These criteria are

based on direct specifications in the

HIPAA, the purpose of the law, and

principles that support the regulatory

philosophy set forth in Executive Order

12866 of September 30, 1993, and the

Paperwork Reduction Act of 1995. In

order to be designated as a standard, a

proposed standard should:

• Improve the efficiency and

effectiveness of the health care system

by leading to cost reductions for or

improvements in benefits from

electronic HIPAA health care

transactions. This principle supports the

regulatory goals of cost-effectiveness

and avoidance of burden.

• Meet the needs of the health data

standards user community, particularly

health care providers, health plans, and

health care clearinghouses. This

principle supports the regulatory goal of

cost-effectiveness.

• Be consistent and uniform with the

other HIPAA standards—their data

element definitions and codes and their

privacy and security requirements—

and, secondarily, with other private and

public sector health data standards. This

principle supports the regulatory goals

of consistency and avoidance of

incompatibility, and it establishes a

performance objective for the standard.

• Have low additional development

and implementation costs relative to the

benefits of using the standard. This

principle supports the regulatory goals

of cost-effectiveness and avoidance of

burden.

• Be supported by an ANSIaccredited standards developing

organization or other private or public

organization that will ensure continuity

and efficient updating of the standard

over time. This principle supports the

regulatory goal of predictability.

• Have timely development, testing,

implementation, and updating

procedures to achieve administrative

simplification benefits faster. This

principle establishes a performance

objective for the standard.

• Be technologically independent of

the computer platforms and

transmission protocols used in HIPAA

health transactions, except when it is

explicitly part of the standard. This

principle establishes a performance

objective for the standard and supports

the regulatory goal of flexibility.

• Be precise and unambiguous, but as

simple as possible. This principle

supports the regulatory goals of

predictability and simplicity.

• Keep data collection and paperwork

burdens on users as low as is feasible.

This principle supports the regulatory

goals of cost-effectiveness and

avoidance of duplication and burden.

• Incorporate flexibility to adapt more

easily to changes in the health care

infrastructure (such as new services,

organizations, and provider types) and

information technology. This principle

supports the regulatory goals of

flexibility and encouragement of

innovation.

We assessed the various options for

an employer identifier against the

principles listed above, with the overall

goal of achieving the maximum benefit

for the least cost. We found that the EIN

met all the principles. No other

candidate employer identifier is in

widespread use. No other candidate met

a majority of the principles, especially

those principles supporting the

regulatory goal of cost-effectiveness. We

are assessing the costs and benefits of
32796 Federal Register / Vol. 63, No. 115 /Tuesday, June 16, 1998 / Proposed Rules

the EIN, but we did not assess the costs

and benefits of other identifier options,

because they did not meet the guiding

principles.

b. Need to Convert

All health care providers, health

plans, and health care clearinghouses

that do not currently use the EIN to

identify the employer in electronic

health transactions that require an

employer identifier would have to

convert. Because the EIN is currently in

widespread use as an employer

identifier throughout the industry,

adopting the EIN would not require

conversion for most health care

providers, health plans or health care

clearinghouses. The selection of the EIN

imposes a far smaller burden on the

industry than any nonselected option

and presents significant advantages in

terms of cost-effectiveness, universality,

and flexibility.

c. Complexity of Conversion

The EIN does not contain embedded

intelligence. For those providers, health

plans, and health care clearinghouses

that must convert to use the EIN, the

complexity of the conversion would be

significantly affected by the degree to

which their processing systems

currently rely on intelligent employer

identifiers. Converting from one

unintelligent identifier to another is less

complex than modifying software logic

to obtain needed information from other

data elements. However, the use of an

unintelligent identifier like the EIN is

required in order to meet the guiding

principle of assuring flexibility.

In general, the shorter the identifier,

the easier it is to implement. It is more

likely that a shorter identifier, such as

the EIN, would fit into existing data

formats.

The selection of the EIN does not

impose a greater burden on the industry

in terms of the complexity of conversion

than the nonselected options.

List of Subjects in 45 CFR Part 142

Administrative practice and

procedure, Health facilities, Health

insurance, Hospitals, Medicaid,

Medicare, Reporting and recordkeeping

requirements.

Accordingly, 45 CFR subtitle A,

subchapter B, would be amended by

adding Part 142 to read as follows:

Note to Reader: This proposed rule is one

of several proposed rules that are being

published to implement the administrative

simplification provisions of the Health

Insurance Portability and Accountability Act

of 1996. We propose to establish a new 45

CFR Part 142. Proposed Subpart A—General

Provisions is exactly the same in each rule

unless we have added new sections or

definitions to incorporate additional general

information. The subparts that follow relate

to the specific provisions announced

separately in each proposed rule. When we

publish the first final rule, each subsequent

final rule will revise or add to the text that

is set out in the first final rule.

PART 142—ADMINISTRATIVE

REQUIREMENTS

Subpart A—General Provisions

Sec.

142.101 Statutory basis and purpose.

142.102 Applicability.

142.103 Definitions.

142.104 General requirements for health

plans.

142.105 Compliance using a health care

clearinghouse.

142.106 Effective date of a modification to

a standard or implementation

specification.

Subparts B—E [Reserved]

Subpart F—National Employer Identifier

Standard

142.602 National employer identifier

standard.

142.604 Requirements: Health plans.

142.606 Requirements: Health care

clearinghouses.

142.608 Requirements: Health care

providers.

142.610 Requirements: Employers.

142.612 Effective dates of the initial

implementation of the national employer

identifier standard.

Authority: Sections 1173 and 1175 of the

Social Security Act (42 U.S.C. 1320d–2 and

1320d–4). 4

Subpart A—General Provisions

§ 142.101 Statutory basis and purpose.

Sections 1171 through 1179 of the

Social Security Act, as added by section

262 of the Health Insurance Portability

and Accountability Act of 1996 (Pub. L.

104–191, 110 Stat. 2021), require HHS

to adopt national standards for the

electronic exchange of health

information in the health care system.

The purpose of these sections is to

promote administrative simplification.

§ 142.102 Applicability.

(a) The standards adopted or

designated under this part apply, in

whole or in part, to the following:

(1) A health plan.

(2) A health care clearinghouse when

doing the following:

(i) Transmitting a standard transaction

(as defined in § 142.103) to a health care

provider or health plan.

(ii) Receiving a standard transaction

from a health care provider or health

plan.

(iii) Transmitting and receiving the

standard transactions when interacting

with another health care clearinghouse.

(3) A health care provider when

transmitting an electronic transaction as

defined in § 142.103.

(b) Means of compliance are stated in

greater detail in § 142.105.

§ 142.103 Definitions.

For purposes of this part, the

following definitions apply:

Code set means any set of codes used

for encoding data elements, such as

tables of terms, medical concepts,

medical diagnostic codes, or medical

procedure codes.

Employer means the following:

(1) The entity for whom an individual

performs or performed any service, of

whatever nature, as the employee of that

entity except that:

(i) If the entity for whom the

individual performs or performed the

services does not have control of the

payment of wages for those services, the

term ‘‘employer’’ means the entity

having control of the payment of the

wages; and

(ii) In the case of an entity paying

wages on behalf of a nonresident alien

individual, foreign partnership, or

foreign corporation, not engaged in

trade or business within the United

States, the term ‘‘employer’’ means that

entity.

(2) Any entity acting directly as an

employer, or indirectly in the interest of

an employer, in relation to an employee

benefit plan and includes a group or

association of employers acting for an

employer in that capacity.

Health care clearinghouse means a

public or private entity that processes or

facilitates the processing of nonstandard

data elements of health information into

standard data elements. The entity

receives health care transactions from

health care providers, health plans,

other entities, or other clearinghouses,

translates the data from a given format

into one acceptable to the intended

recipient, and forwards the processed

transaction to the appropriate recipient.

Billing services, repricing companies,

community health management

information systems, community health

information systems, and ‘‘value-added’’

networks and switches that perform

these functions are considered to be

health care clearinghouses for purposes

of this part.

Health care provider means a

provider of services as defined in

section 1861(u) of the Social Security

Act, 42 U.S.C. 1395x, a provider of

medical or other health services as

defined in section 1861(s) of the Social

Security Act, 42 U.S.C. 1395x, and any

other person who furnishes or bills and

is paid for health care services or
Federal Register / Vol. 63, No. 115 /Tuesday, June 16, 1998 / Proposed Rules 32797

supplies in the normal course of

business.

Health information means any

information, whether oral or recorded in

any form or medium, that—

(1) Is created or received by a health

care provider, health plan, public health

authority, employer, life insurer, school

or university, or health care

clearinghouse; and

(2) Relates to the past, present, or

future physical or mental health or

condition of an individual, the

provision of health care to an

individual, or the past, present, or

future payment for the provision of

health care to an individual.

Health plan means an individual or

group plan that provides, or pays the

cost of, medical care. Health plan

includes the following, singly or in

combination:

(1) Group health plan. Group health

plan is an employee welfare benefit plan

(as currently defined in section 3(1) of

the Employee Retirement Income and

Security Act of 1974, 29 U.S.C. 1002(1)),

including insured and self-insured

plans, to the extent that the plan

provides medical care, including items

and services paid for as medical care, to

employees or their dependents directly

or through insurance, or otherwise,

and—

(i) Has 50 or more participants; or

(ii) Is administered by an entity other

than the employer that established and

maintains the plan.

(2) Health insurance issuer. A health

insurance issuer is an insurance

company, insurance service, or

insurance organization that is licensed

to engage in the business of insurance

in a State and is subject to State law that

regulates insurance.

(3) Health maintenance organization.

A health maintenance organization is a

Federally qualified health maintenance

organization, an organization recognized

as a health maintenance organization

under State law, or a similar

organization regulated for solvency

under State law in the same manner and

to the same extent as such a health

maintenance organization.

(4) Part A or Part B of the Medicare

program under title XVIII of the Social

Security Act.

(5) The Medicaid program under title

XIX of the Social Security Act.

(6) A Medicare supplemental policy

(as defined in section 1882(g)(1) of the

Social Security Act, 42 U.S.C. 1395ss).

(7) A long-term care policy, including

a nursing home fixed-indemnity policy.

(8) An employee welfare benefit plan

or any other arrangement that is

established or maintained for the

purpose of offering or providing health

benefits to the employees of two or more

employers.

(9) The health care program for active

military personnel under title 10 of the

United States Code.

(10) The veterans health care program

under 38 U.S.C. chapter 17.

(11) The Civilian Health and Medical

Program of the Uniformed Services

(CHAMPUS), as defined in 10 U.S.C.

1072(4).

(12) The Indian Health Service

program under the Indian Health Care

Improvement Act (25 U.S.C. 1601 et

seq.).

(13) The Federal Employees Health

Benefits Program under 5 U.S.C. chapter

89.

(14) Any other individual or group

health plan, or combination thereof, that

provides or pays for the cost of medical

care.

Medical care means the diagnosis,

cure, mitigation, treatment, or

prevention of disease, or amounts paid

for the purpose of affecting any body

structure or function of the body;

amounts paid for transportation

primarily for and essential to these

items; and amounts paid for insurance

covering the items and the

transportation specified in this

definition.

Participant means any employee or

former employee of an employer, or any

member or former member of an

employee organization, who is or may

become eligible to receive a benefit of

any type from an employee benefit plan

that covers employees of that employer

or members of such an organization, or

whose beneficiaries may be eligible to

receive any of these benefits.

‘‘Employee’’ includes an individual who

is treated as an employee under section

401(c)(1) of the Internal Revenue Code

of 1986 (26 U.S.C. 401(c)(1)).

Small health plan means a group

health plan or an individual health plan

with fewer than 50 participants.

Standard means a set of rules for a set

of codes, data elements, transactions, or

identifiers promulgated either by an

organization accredited by the American

National Standards Institute or HHS for

the electronic transmission of health

information.

Transaction means the exchange of

information between two parties to

carry out the financial and

administrative activities related to

health care. It includes the following:

(1) Health claims or equivalent

encounter information.

(2) Health care payment and

remittance advice.

(3) Coordination of benefits.

(4) Health claims status.

(5) Enrollment and disenrollment in a

health plan.

(6) Eligibility for a health plan.

(7) Health plan premium payments.

(8) Referral certification and

authorization.

(9) First report of injury.

(10) Health claims attachments.

(11) Other transactions as the

Secretary may prescribe by regulation.

§ 142.104 General requirements for health

plans.

If a person conducts a transaction (as

defined in § 142.103) with a health plan

as a standard transaction, the following

apply:

(a) The health plan may not refuse to

conduct the transaction as a standard

transaction.

(b) The health plan may not delay the

transaction or otherwise adversely

affect, or attempt to adversely affect, the

person or the transaction on the ground

that the transaction is a standard

transaction.

(c) The health information transmitted

and received in connection with the

transaction must be in the form of

standard data elements of health

information.

(d) A health plan that conducts

transactions through an agent must

assure that the agent meets all the

requirements of this part that apply to

the health plan.

§ 142.105 Compliance using a health care

clearinghouse.

(a) Any person or other entity subject

to the requirements of this part may

meet the requirements to accept and

transmit standard transactions by

either—

(1) Transmitting and receiving

standard data elements; or

(2) Submitting nonstandard data

elements to a health care clearinghouse

for processing into standard data

elements and transmission by the health

care clearinghouse and receiving

standard data elements through the

health care clearinghouse.

(b) The transmission, under contract,

of nonstandard data elements between a

health plan or a health care provider

and its agent health care clearinghouse

is not a violation of the requirements of

this part.

§ 142.106 Effective date of a modification

to a standard or implementation

specification.

HHS may modify a standard or

implementation specification after the

first year in which HHS requires the

standard or implementation

specification to be used, but not more

frequently than once every 12 months.

If HHS adopts a modification to a

standard or implementation

specification, the implementation date
32798 Federal Register / Vol. 63, No. 115 /Tuesday, June 16, 1998 / Proposed Rules

of the modified standard or

implementation specification may be no

earlier than 180 days following the

adoption of the modification. HHS

determines the actual date, taking into

account the time needed to comply due

to the nature and extent of the

modification. HHS may extend the time

for compliance for small health plans.

Subparts B–E [Reserved]

Subpart F—National Employer

Identifier Standard

§ 142.602 National employer identifier

standard.

The employer identifier standard that

must be used under this subpart is the

employer identification number (EIN),

which is the taxpayer identifying

number of an individual or other entity

(whether or not an employer) that is

assigned pursuant to 26 U.S.C. 6011(b),

or corresponding provisions of prior

law, or pursuant to 26 U.S.C. 6109, and

in which nine digits are separated by a

hyphen, as follows: 00–0000000. The

EIN is assigned by the Internal Revenue

Service, U.S. Department of the

Treasury.

§ 142.604 Requirements: Health plans.

Each health plan must accept and

transmit the national employer

identifier of any employer that must be

identified by the national employer

identifier in any standard transaction.

§ 142.606 Requirements: Health care

clearinghouses.

Each health care clearinghouse must

use the national employer identifier of

any employer that must be identified by

the national employer identifier in any

standard transaction.

§ 142.608 Requirements: Health care

providers.

Each health care provider must use

the national employer identifier

wherever required on all transactions

the health care provider transmits

electronically.

§ 142.610 Requirements: Employers.

Each employer must disclose its EIN,

when requested, to any entity that

conducts standard electronic

transactions that require that employer’s

identifier.

§ 142.612 Effective dates of the initial

implementation of the national employer

identifier standard.

(a) Health plans. (1) Each health plan

that is not a small health plan must

comply with the requirements of

§§ 142.104 and 142.604 by [24 months

after the effective date of the final rule

in the Federal Register].

(2) Each small health plan must

comply with the requirements of

§§ 142.104 and 142.604 by [36 months

after the effective date of the final rule

in the Federal Register].

(b) Health care clearinghouses and

health care providers. Each health care

clearinghouse and health care provider

must begin using the standard specified

in § 142.602 by [24 months after the

effective date of the final rule in the

Federal Register].

Dated: April 17, 1998.

Donna E. Shalala,

Secretary.

[FR Doc. 98–15782 Filed 6–15–98; 8:45 am]

BILLING CODE 4120–01–P

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 64

[CC Docket No. 98–67; FCC 98–90]

Telecommunications Relay Services

and Speech-to-Speech Services for

Individuals With Hearing and Speech

Disabilities

AGENCY: Federal Communications

Commission.

ACTION: Proposed rule.

SUMMARY: On May 14, 1998, the

Commission adopted a Notice of

Proposed Rulemaking (NPRM) regarding

telecommunications relay services

(TRS) and speech-to-speech (STS) relay

services, for persons with hearing and

speech disabilities. We believe that our

proposed rule amendments will

enhance the quality of TRS, and

broaden the potential universe of TRS

users. The proposals set forth in the

NPRM are intended to further promote

access to telecommunications for the

millions of persons with disabilities

who might otherwise be foreclosed from

participation in our increasingly

telecommunications and informationoriented society. Rules proposed in the

NPRM would require that, within two

years of the publication in the Federal

Register of a Report and Order in this

proceeding, common carriers providing

voice transmission service must ensure

that nationwide STS relay services are

available to users with speech

disabilities throughout their service

area. Rules proposed in the NPRM also

would amend the Commission’s current

mandatory minimum standards for TRS

service to improve the effectiveness of

these rules and their application to TRS

service.

DATES: Written comments are due on or

before July 20, 1998. Reply comments

are due on or before September 14,

1998. Written comments by the public

on the proposed information collections

are due July 20, 1998.

ADDRESSES: Office of the Secretary,

Room 222, Federal Communications

Commission, 1919 M Street, NW,

Washington, DC 20554. In addition to

filing comments with the Secretary, a

copy of any comments on the

information collections contained

herein should be submitted to Judy

Boley, Federal Communications

Commission, Room 234, 1919 M Street,

N.W., Washington, DC 20554, or via the

Internet to jboley@fcc.gov, and to

Timothy Fain, OMB Desk Officer, 10236

NEOB, 725—17th Street, N.W.,

Washington, DC 20503 or via the

Internet to fainlt@al.eop.gov.

FOR FURTHER INFORMATION CONTACT: Kris

Monteith, 202/418–1098 (Voice), 202/

418–0484 (TTY), 202/418–2345 (FAX),

kmonteit@fcc.gov, Network Services

Division, Common Carrier Bureau. For

additional information concerning the

information collections contained in

this NPRM contact Judy Boley at 202–

418–0214, or via the Internet at

jboley@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a

summary of the Commission’s Notice of

Proposed Rulemaking (NPRM) in the

matter of Telecommunications Relay

Services and Speech-to-Speech Services

for Individuals with Hearing and

Speech Disabilities, (CC Docket No. 98–

67, adopted May 14, 1998, and released

May 20, 1998). The full text of the

NPRM is available for inspection and

copying during the weekday hours of 9

a.m. to 4:30 p.m. in the Commission’s

Reference Center, Room 239, 1919 M

Street, N.W., or copies may be

purchased from the Commission’s

duplicating contractor, ITS, Inc., 2100 M

Street, N.W., Suite 140, Washington

D.C. 20037, 202/857–3800. Written

comments must be submitted by the

Office of Management and Budget

(OMB) on the proposed information

collections on or before August 17,

1998.

Paperwork Reduction Act of 1995

This NPRM contains proposed

information collection. The

Commission, as part of its continuing

effort to reduce paperwork burdens,

invites the general public and the Office

of Management and Budget (OMB) to

comment on the information collections

contained in this NPRM, as required by

the Paperwork Reduction Act of 1995,

Public Law No. 104–13. Public and

agency comments are due at the same

time as other comments on this NPRM;

OMB comments are August 17, 1998.