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CMS Mandates Operating Rules to Cut Red Tape in Doctors' Offices

By John Reichard, CQ HealthBeat Editor

Pause for a moment and enter the arcane world of electronic health care transactions—things like checking on whether a patient is covered by a health plan or determining the status of a patient's insurance claim.

In the realm of these and other transactions in the doctor's office involving the staff and the patient, or the staff and a health plan, federal law already requires that certain standards be followed. Thus, for example, the electronic claims-handling systems of health insurers must tell a doctor's office whether a patient is enrolled in a particular plan.

But there is no consistent way in which plans must meet this eligibility standard. For that to occur, operating rules are needed to specify what information an insurer would have to give in notifying a doctor's office that a patient is covered by the plan.

The information from the insurer could consist of a simple "yes," or the insurer could provide something more, such as saying how much the patient has to cough up as a co-pay for the visit to the doctor, or how far he or she has gone to meet the plan's deductible.

The distinction between a standard and an operating rule may seem unimportant, but adopting the latter will save billions, Centers for Medicare and Medicaid Services officials announced in a press briefing.

Specifically, two operating rules CMS is mandating under the health care law (PL 111-148, PL 111-152) will save $12 billion over 10 years, officials said. The rules pertain to patient eligibility and claims status. This marks the first time CMS has required operating rules under the federal standards for electronic health care transactions.

"This is, out of the gate, a $12 billion savings over the next decade," said Denise Buenning, director of the Administrative Simplification Group at CMS. "As we proceed with the development of additional administrative simplification regulations as a result of the Affordable Care Act, we will obviously add on to that total. We will be adopting additional operating rules as we go forward."

"The operating rule just gives you a little more specificity as to how exactly to format" information, she added. Thus office staff saves time from no longer having to figure out the different ways individual health insurers want them to input information.

CMS says insurers and providers will save time and money and doctors will have more time to spend on patient care, officials said. And patients will be served because they'll know on the spot what they have to pay out of pocket or whether their deductible has been met.

But there are costs involved. Health plans will have training, equipment and software costs ranging from $2.5 billion to $5 billion over 10 years to comply with the two rules, and providers will have costs ranging from $400 million to $800 million. But the savings of up to $12 billion is the net of those costs.

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