Understanding HIPAA Transactions and Code Set (TCS) Standards

July 24, 2018
Insurance billing services

Computerized eligibility verification, automated claims processing and data reporting used to be considered the “holy grail” of the healthcare industry. With the passage of the Health Insurance Portability and Accountability Act (HIPAA) of 1996, it became a national objective to standardize healthcare transactions. HIPAA law and its subsequent amendments sought to simplify the process of medical health records management and payments mechanisms for the health services. This article explores the various HIPAA transactions and code set standards and their associated benefits.

An Overview

The HIPAA Transactions and Code Sets (TCS) are rules that govern the exchange of healthcare information, and financial transactions among the parties involved in the healthcare industry. HIPAA law mandated the Department of Health and Human Services (HHS) to initiate incentive programs that will encourage clinicians to adopt electronic data interchange (EDI) standards. These initiatives had been started on the request of the healthcare industry, as the industry lagged behind many other industries in the USA that had already embraced the new technology. The regulatory requirements have been consistently updated based on feedback on agency’s proposed changes or suggestions from the health industry. While we have come a long way forward since then, a small minority of clinicians still use paper-based records.

Implementing the TCS rules can be called a business process re-engineering which involves technologies that complicate and simplify the matters with the same token. “Complicate” because it involves tech know-how and expensive technology, and “simplify” because it will lead to simplifications over time. An issue to be kept in mind during implementation is that there may be significant friction between the existing staff and EHR vendors. This friction can come into play even when while upgrading the system to match the current requirements. Software vendors and their clients need to work in tandem to avoid any confusions and misunderstanding during the transition phase.

A key towards removing confusion and encouraging collaboration is transparency. If information about the change, and the necessity of the change is clear in the minds of all involved; things can go much smoother. This piece may help those who want clarity on what are the HIPAA transaction and code set standards and why they are necessary.

Standardized Code Sets

The HIPAA Medical Billing law eliminated all local and proprietary code sets and required the standardization of the medical data. The law requires the healthcare industry to use the following six code set standards.

  • International Classification of Diseases, 10th Edition, Clinical Modification (ICD-10-CM) (for diagnosis coding)
  • International Classification of Diseases, 10th edition, Procedure Coding System (ICD-10-PCS) (for Hospital Inpatient Procedure Coding)
  • Current Procedural Terminology (CPT) (HCPCS Level 1)
  • Health Care Common Procedure Coding System (HCPCS Level 2)
  • The Code on Dental Procedures and Nomenclature (CDT)
  • National Drug Codes (NDC)

Standardized Transaction Formats

HIPAA law also required all health plans and medical billing service providers to use standardized transaction formats to achieve meaningful use and interoperability. In 2009, the following formats replaced the previously existing hundreds of proprietary formats:

  1. Health Plan Eligibility Inquiry/Response Standards

HHS adopted the 5010 version of the ASC X12N 270/271 for eligibility inquiry and response. The form 270 is for the inquiry of eligibility from a healthcare provider to a health insurance company, while the form 271 is for the insurance provider to respond to the query.

  1. Health Care Claim Status Formats

The adopted standards for claims status requests and response are the 5010 versions of the ASC X12N 276/277 respectively.

  1. Referral Certification and Authorization Form

The next form taken by HHS is the 5010 version of the ASC X12N 278 for the referral certification and authorization. It can be used to obtain authorization for certain services from the insurance providers.

  1. Premium Payment to Health Plans

The 5010 version of the ASC X12N 820 form is used by the employers, associations, or individuals to make payments to their health plan providers.

  1. Health Plan Enrollment/ Disenrollment Proforma

The standard adopted for the enrollment or disenrollment in a health insurance plan is the ASC X12N 834.

  1. Remittance Advice and Electronic Funds Transfer Formats

The HIPPA law requires all payers to use the claims adjustment reason codes (CARCs) and remittance advice remark codes (RARCs) for an explanation of benefits. For the electronic funds transfer the payers are required to use CCD+Addenda and the ASC X12 835 TR3 for trace number (TRN) segment implementation specification.

  1. Claim Encounter Information and Coordination of Benefits

The version 5010 of the ASC X12N 837 is used by health care providers to file a claim to the insurance providers. The same form is used for obtaining payment from a single insurance provider or more than one health plans. In the second case, the objective is the coordination of benefits between the health plans that cover the insured patient.

Benefits of Standardization

Since the introduction of HIPAA law, there has been a slow but steady growth in adoption of standardization and electronic health records (EHRs). It has resulted in many advantages for the insurance providers, billers, clinicians, and patients alike. Some of the core advantages are listed below:

  • Decreased processing time due to real-time data transfer
  • Removal of inefficiencies of paper base documentation
  • Efficient coordination of benefits
  • Easier fraud detection
  • Improvement of overall data quality
  • Enhanced data privacy and security
  • Improved interoperability
  • Increased patient participation
  • Better coordination of care

Still Not Clear!

If the above information was not detailed enough, or there was still some confusion in it; there is no need to worry at all. P3 Healthcare Solutions is a medical billing services provider that has years of experience in the field. Our team of medical billing and coding experts has answers to everything you may need to know. Call us at 1-844-557-3227 or email your query at info@p3care.com

Want To Stay on top of the latest search trends?

Get top insights and news from our search experts.

error: Content is protected !! Legal action can be taken.