What: Federal Regulations issued under HIPAA in 2012 require self-funded, “controlling” group health plans to obtain a unique Health Plan Identifier (HPID). HPIDs are 10-digit numbers that will be used to identify health plans within electronic transactions.
When: Large health plans are required to obtain their HPID by November 5, 2014. Small health plans are given one additional year to obtain their number. For the purposes of this rule, small self-funded health plans are those with less than $5 million in annual claims paid.
By November 7, 2016, HPIDs must be used in all standard transactions.
Why: Currently, health plan related electronic transactions utilize plan identifiers differing in length and format. This creates difficulties with properly identifying the appropriate plan responsible for payment of claims. This leads to frequent misrouting and rejection of electronic claims transactions.
In order to increase claims efficiency and reduce errors across the U.S., a standard health plan identifier format is being adopted. While the costs of adopting HPIDs are largely imposed on self-funded group health plans, former Department of Health and Human Services Secretary Kathleen Sebelius has stated that the benefits for the healthcare industry are estimated to reach up to $6 billion over ten years.
Who must obtain an HPID: Health plans that meets the definition of a Controlling Health Plan (CHP) must obtain a HPID. A CHP is defined as a health plan that:
- Controls its own business activities, actions, or policies; or is controlled by an entity that is not a health plan; and
- If it has a sub-health plan(s), exercises sufficient control over the sub-health plan(s) to direct its/their business activities, actions, or policies.
- CHP status is not defined by whether a Plan engages in standard transactions
- Plan Sponsors of medical plans which are exclusively fully insured plans are not required to obtain an HPID because the coverage can be identified with their insurer’s identifier (however Plan Sponsors with fully insured coverage and self-funded coverages such as HRAs must obtain an HPID).
- Sub-health plans within a CHP are not required to obtain an HPID, but it has the option of obtaining its own HPID if it believes it will simplify plan administration.
Admin America’s opinion is that most HRAs integrated with fully insured health coverage are CHP’s and therefore the Plan Sponsors of such HRAs are required to obtain an HPID by the appropriate deadline.
Given that very few HRAs integrated with group health insurance will surpass the $5 million claims threshold to be designated at a large health plan for the purposes of the HPID, no action will be required for such plans until November 2015.
How to obtain an HPID: The 2012 regulations clarify that Third-Party Administrators (TPAs) cannot apply for an HPID on behalf of a group health plan. This HPID must be obtained directly by the Plan Sponsor.
Currently, the Center for Medicare and Medicaid Service’s (CMS) online HPID registration system is extremely cumbersome and in drastic need of simplification. Admin America strongly encourages HRA Plan Sponsors that are considered to be small plans to wait until 2015 to undertake the registration process in hopes it will be simplified in the interim.
Admin America will be happy to address any other questions you have about the Health Plan Identifier or HRA Compliance. You may contact us via e-mail firstname.lastname@example.org or via telephone toll-free at 1-800-366-2961.