CMS-10423_Supporting_Statement_Part_A

Supporting Statement for Health Plan Identifier, Other Entity Identifier, and Change to
National Provider Identifier Requirements in 45 CFR Part 162

Background
The Affordable Care Act (ACA) enacted on March 23, 2010 includes sections related to
administrative simplification (Sec. 1104) and standards for financial and administrative
transactions (Sec. 10109). These provisions are directly connected to those under the Health
Insurance and Portability Act of 1996 (HIPAA) with respect to the adoption and use of standards
for certain health care transactions. Section 1104 of the ACA requires the Secretary of Health and
Human Service (HHS) to establish a unique health plan identifier based on the input of the
National Committee on Vital and Health Statistics. The Secretary may do so on an interim final
basis and such rule shall be effective no later than October 1, 2012.
The Affordable Care Act builds on the existing requirement in Section 1173(b) of the
Social Security Act (SSA) to adopt unique health identifiers. It specifically states that the
Secretary “shall adopt standards providing for a standard unique health identifier for each
individual, employer, health plan, and health care provider for use in the health care system. In
carrying out the preceding sentence for each health plan and health care provider, the Secretary
shall take into account multiple uses for identifiers and multiple locations and specialty
classifications for health care providers.”
Health plan is defined in Section 1171(5) of the SSA. Health plan means an
individual or group plan that provides, or pays the cost of, medical care (as
defined in section 2791(a)(2) of the Public Health Service Act, 42 U.S.C 300gg91(a)(2)).
(1) Health plan includes the following, singly or in combination:
(i) A group health plan.
(ii) A health insurance issuer.
(iii) An HMO.
(iv) Parts A, B, or C of the Medicare program.
(v) The Medicaid program.

(vi) An issuer of a Medicare supplemental policy.
(vii) An issuer of a long-term care policy, excluding a nursing home fixedindemnity policy.
(viii) 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.
(ix) The health care program for active military personnel.
(x) The veterans health care program.
(xi) The Civilian Health and Medical Program of the Uniformed Services
(CHAMPUS).
(xii) The Indian Health Service program under the Indian Health Care
Improvement Act.
(xiii) The Federal Employees Health Benefits Program.

The definition of health plan is expanded in 45 CFR 160.103 to include the following.
Regulatory (§160.103) Definition of Health Plan
(xiv) An approved State child health plan, providing benefits for child health
assistance.
(xv) The Medicare+Choice program.
(xvi) A high risk pool that is a mechanism established under State law to provide
health insurance
coverage or comparable coverage to eligible individuals.
(xvii) Any other individual or group

The use of this standard idenitifer will promote efficiency, simplify administrative tasks,
encourage faster automation of health care transactions, reduce administrative functions, and
improve accuracy.
B.

Justification

1. Need and Legal Basis
Purpose and Background

This proposed regulation associated with this information collection request [CMS-0040-P; RIN
0938-AQ13] proposes the adoption of the standard for a national unique health plan identifier
(HPID), the adoption of a data element that will serve as an other entity identifier (OEID). In
addition, this rule proposes a new National Provider Identifier (NPI) requirement.
HPID
This proposed rule would implement section 1104 of the of the Patient Protection and Affordable
Care Act (hereinafter referred to as the Affordable Care Act) by establishing new requirements
for administrative transactions that would improve the utility of the existing Health Insurance
Portability and Accountability Act of 1996 (HIPAA) transactions and reduce administrative
burden and costs.
Currently, health plans and other entities that perform health plan functions, such as third
party administrators and clearinghouses, are identified in the standard transactions using multiple
identifiers that differ in length and format. Health care providers are frustrated by the following
problems associated with the lack of a standard identifier: the routing of transactions; rejected
transactions due to insurance identification errors; difficulty determining patient eligibility; and
challenges resolving errors identifying the health plan during claims processing.
The adoption of the HPID and the OEID will increase standardization within the HIPAA
standard transactions and provide a platform for other regulatory and industry initiatives. Their
adoption will allow for a higher level of automation for provider offices, particularly for provider
processing of billing and insurance related tasks, eligibility responses from the health plans and

remittance advice that describes health care claim payments.

NPI
This proposed rule supports the statutory purpose of the Administrative Simplification
provisions of HIPAA “to improve the Medicare program under title XVIII of the Social Security
Act, the medicaid program under title XIX of such Act, and the efficiency and effectiveness of
the health care system, by encouraging the development of a health information system through
the establishment of uniform standards and requirements for the electronic transmission of
certain health information and to reduce the clerical burden on patients, health care providers,
and health plans.” Section 261 of the Act (42 U.S.C. 1320d note). It also supports section
1173(a)(3) of the Act, which requires the transaction standards adopted by the Secretary to
accommodate the needs of different types of health care providers.
In January 2004, we published a final rule in which the Secretary adopted the National
Provider Identifier (NPI) as the standard unique health care provider identifier and the
requirements for obtaining and using the NPI. Since that time, pharmacies are encountering
situations where the NPI of a prescribing health care provider needs to be included in the
pharmacy claim, but the prescribing health care provider does not have an NPI or has not
disclosed it. This situation has become notably problematic in the Medicare Part D program.
This new NPI requirement seeks to address this issue.
2. Information Users
Health plans, health care clearinghouses, and health care providers will be required to use the the
health plan identifiers to identify health plans in the standard transactions.

3. Improved Information Technology

The benefits of the electronic transfer of this information are a substantial reduction in handling
and processing time, the elimination of the inefficiencies associated with the handling of paper
documents, a reduction in administrative burden, lower operating costs, and improved data
quality and standardization. Enumerating each applicable entity and including applicable
information in the HPID directory database should enable many provider and individual
questions that arise in the course of processing transactions to be addressed.

4. Duplication of Similar Information
These standards will replace through standardization, rather than duplicate, existing health plan
identification enumeration systems which were inconsistent and often proprietary.

5. Small Businesses
Small businesses are not significantly affected by this collection. We expect that this proposed
rule would have a modest impact on a substantial number of small entities.

6. Less Frequent Collection
Enumeration of health plans is required under law, in order for health plan entities to conduct
business. If not enumerated, a health plan will not be allowed to conduct business. After the
initial enumeration, an annual validation is the minimum standard deemed acceptable to assure
that the information that is collected is accurate in order to carry out administrative and financial
health transactions.

7. Special Circumstances
There are no applicable special circumstances.

8. Federal Register Notice/Outside Consultation
The notice of proposed rulemaking (CMS-0040-P) published in the Federal Register on
April 17, 2012 (77 FR 22950).

In the course of the development of the updated transaction standards, exhaustive consultations
took place with a number of outside organizations, including those with whom consultation is
required by Subtitle F. These include the National Uniform Billing Committee, the National
Uniform Claim Committee, Workgroup for Electronic Data Interchange, the American Dental
Association, the National Council for Prescription Drug Programs, and the National Committee
on Vital and Health Statistics. We have obtained endorsement for the proposed enumeration
system from each of these organizations.

9. Payment/Gift To Respondent
There will be no payments/gifts to respondents.
10. Confidentiality
There is no information of a proprietary or confidential nature required for the issuance of the
Health Plan identification number. The purpose of the required enumeration is to improve the
efficiencies and accuracy of electronic healthcare transactions.

11. Sensitive Questions
No information will be collected on sexual behavior and attitudes, religious beliefs, and other
matters commonly considered private.

12. Burden Estimate (Total Hours & Wages)
HPID
In order to apply for an HPID or OEID, there is an initial onetime requirement for
information burden on health plans and other entities that elect to apply for an OEID.

In

addition, health plans and other entities may need to provide updates to information.
Under this proposed rule, a Controlling Health Plan “CHP”, as defined in 45 CFR 162.103,
will have to obtain an HPID from a centralized electronic Enumeration System. A Sub Health
Plan “SHP”, as defined in 45 CFR 162.103, would be eligible but not required to obtain an

HPID. If a SHP obtains an HPID, it would apply either directly to the Enumeration System or its
CHP would apply to the Enumeration System on its behalf. Other entities may apply to obtain an
OEID from the Enumeration System. Health plans that obtain an HPID and other entities that
obtain an OEID would have to communicate any changes to their information to the Enumeration
System within 30 days of the change. A covered entity must use an HPID to identify a health
plan in a standard transaction.
We estimate that there will be up to 15,000 entities that will be required to, or will elect to,
obtain an HPID or OEID. We based this number on the following data:
Type of Entity
Self insured group health plans
Health insurance issuers, individuals and
group health markets, HMOs, including
companies offering Medicaid managed care
Medicare, Veterans Health Administration
(VHA), Indian Health Service (IHS),
TRICARE, and State Medicaid programs
Clearinghouses and Transaction Vendors
Third Party Administrators
Total

Number of Entities
12,000*
1,827**

60

162***
750 ****
~ 15,000

*"Report to Congress: Annual Report on Self –Insured Group Health Plans," by Hilda L. Solis, Secretary of Labor,
March 2011.
** Health Insurance Reform; Modifications to the Health Insurance Portability and Accountability Act (HIPAA)
Electronic Transaction Standards; Proposed Rule http://edocket.access.gpo.gov/2008/pdf/E8-19296.pdf, based on a
study by Gartner.
*** Health Insurance Reform; Modifications to the Health Insurance Portability and Accountability Act (HIPAA)
Electronic Transaction Standards; Proposed Rule http://edocket.access.gpo.gov/2008/pdf/E8-19296.pdf, based on a
study by Gartner.
**** Summary of Benefits and Coverage and the Uniform Glossary; Notice of Proposed
Rulemaking http://www.gpo.gov/fdsys/pkg/FR-2011-08-22/pdf/2011-21193.pdf.

Note that the number of health plans that will be required to obtain, or have the option to
obtain an HPID is considerably larger than the number of health plans for which we analyze in
section V. of this proposed rule. This is because self-insured health plans are required to obtain

HPIDs if they meet the requirements of a Controlling health plan under this proposed rule.
However, we assume that very few self-insured group health plans conduct standard transactions
themselves; rather, they typically contract with third party administrators or insurance issuers to
administer the plans. Therefore, there will be significantly fewer health plans that use HPIDs in
standard transactions than health plans that are required to obtain HPIDs, and only health plans
that use the HPIDs in standard transactions will have direct costs and benefits.
To comply with these requirements, health plans will complete an HPID enrollment
application/update form online through the Enumeration System. This online form serves two
purposes: It enables a health plan to apply for an HPID and to provide updates to the
Enumeration System.
Other entities electing to apply for an OEID must complete an application/update form
online through the Enumeration System. The online form serves two purposes: it enables other
entities to apply for an OEID and to provide updates to the Enumeration System.
Most health plans and other entities will not have to furnish updates in a given year.
However, lacking any available data on rate of change, we elected to base our assumptions on
information in the Medicare program that approximately 12.6 percent of health care providers
provide updates in a calendar year. We anticipate this figure would be on the high end for health
plans and other entities. Applying this assumption, we can expect that 1,764 health plans will
need to complete and submit the HPID application update form in a given year.
Applying for HPID or OEID is a one-time burden. In future years, this burden would
apply only to new health plans and as an option for other entities as described in the section IV.
of this proposed rule. From 2013 to 2018, industry trends indicate that the number of health

plans will remain constant, or even decrease.1 Therefore, our calculations reflect that there will
be no statistically significant growth in the number of health plans or other entities and we
calculate zero growth in new applications.
We estimate it will take 30 minutes to complete the application form and use an hourly
labor rate of approximately $23/hour, the average wage reported for professional and business
and services sector, based on data from the Department of Labor, Bureau of Labor Statistics,
June 2010, "Average hourly and weekly earnings of production and nonsupervisory employees
(1) on private nonfarm payrolls." (ftp://ftp.bls.gov/pub/suppl/empsit.ceseeb11.txt). This
represents a unit cost of $11.50 per application for both HPID and OEID.
Because our initial estimate for the number of applications for OEID is small (162
Clearinghouses and Transaction Vendors + 750 Third party administrators = ~ 1,000) and the
costs negligible, we do not include separate calculations. We have elected instead to offer the
unit cost figure as a baseline if commenters demonstrate that the universe of applications for
OEID is likely to expand significantly.
We are proposing to put an additional requirement on covered organization health care
providers that have as members, employees, or contracts with individual health care providers
who are not a covered entities and who are prescribers. By 180 days after the effective date of
the final rule, such organizations must require such health care provider to: (1) obtain, by
application if necessary, an NPI from the National Plan and Provider Enumeration System
1 Robinson, James C., “Consolidation and the Transformation of Competition in Health Insurance,” Health Affairs,
23, no.6 (2004):11-24
“Private Health insurance: Research on Competition in the Insurance Industry,” United States Government
Accountability Office (GAO), July 31, 2009 (GAO-09-864R)
American Medical Association, "Competition in Health Insurance: A Comprehensive Study of US Markets," 2008
and 2009.

(NPPES); (2) to the extent the prescriber writes a prescription while acting within the scope of
the prescriber's relationship with the organization, disclose his or her NPI, upon request to any
entity that needs the NPI to identify the prescriber in a standard transaction;
The burden associated with the addition to the requirements of §162.410 as discussed in
this proposed rule is the initial one-time burden on prescribers who do not already have an NPI,
who have a relationship with a covered health care provider, and who must be indentified in a
standard transaction, to apply for an NPI and later to furnish updates, as necessary. We estimate
that there are approximately 1.4 million prescribers in the United States and that approximately
160,000 of them do not have an NPI. It is these prescribers who would have to obtain an NPI if
this rule is finalized as proposed. Based on the estimations in the NPI final rule, we estimate that
it will take 20 minutes to complete an application for an NPI and use an hourly labor rate of
approximately $23/hour, the average wage reported for professional and business and services
sector, based on data from the Department of Labor, Bureau of Labor Statistics, June 2011,
"Average hourly and weekly earnings of production and nonsupervisory employees (1) on private
nonfarm payrolls." (ftp://ftp.bls.gov/pub/suppl/empsit.ceseeb11.txt). Additionally, we have
calculated an increase of 3 percent for labor costs for each of the years 2013 through 2016 for an
hour rate of approximately $24/hour for year 2013.
Table 1 shows the estimated annualized burden for the HPID and NPI PRA in hours.

TABLE 1. Annual Information Collection Burden

Regulation
Section
§162.410
§160.512
Total

OMB
Control
No.
0938New
0938New

Total
Annual
Burden

Hourly
Labor
Cost of
Reporting
($)

Total
Labor
Cost

Total
Capital/
Maintenance
Costs ($)

Total
Cost
($)

Respondents

Responses

Burden
per
Response
(hours)

160,000

160,000

0.33

52,800

24

1,267,200

0

1,267,200

15,000
175,000

15,000
175,000

0.50

7,500
60,300

24

180,000

0

180,000
760,000

13. Capital Costs (Maintenance of Capital Costs)
The start-up costs are reported in Table 1. Maintenance of the identifier will be conducted in the
routine conduct of business and is not anticipated to have any additional impact.

14. Cost to Federal Government
The Health Plan Identifier System will be built as a module on the Health Insurance Oversight
System (HIOS), which is an existing CMS system. In addition, the HPID System will leverage
the HIOS help desk to provide support for health plans and other entities as they apply to obtain
identifiers. It is estimated to cost approximately $1.5 million to build the system and operate the
help desk. In addition, we estimate that half of a GS-12 equivalent employee’s time will be
allocated to evaluating and overseeing the program for the first two years. We estimate this will
add an approximate $37,436 per year or $74,872 in total.

15. Program Changes
The burden associated with this collection is increasing because health plans will need to apply to
obtain health plan identifiers.

16. Publication and Tabulation Dates
There are no publication and tabulation dates.

17. Expiration Date
We are not seeking this exception.