HPID: Anatomy of the health plan identifier

Carl Natale
by Carl Natale

The ICD-10 implementation deadline change is bundled with a proposal to create something called a health plan identifier (HPID). It's nothing new.

The Patient Protection and Affordable Care Act (ACA) called for its creation. It's due to go in effect by Oct. 1.

The problem it is trying to solve is that there is no uniform way to identify health plans or similar healthcare organizations. According to the Department of Health and Human Services, this creates a few problems:

  • Improper transaction routing
  • Rejected claims
  • Confusion surrounding patient eligibility
  • Challenges because health plans are not correctly identified

The HPID and another data element - the other entity identifier (OEID) - will aid in the automation of claims processing. Which means fewer errors and more efficient reimbursement. At least that's the hope.

And that hope is shared by the American Medical Association (AMA). They back the concept of a HPID and even have a FAQ on how a NPID could be implemented (49KB PDF).

There are a couple other things that's supposed to move electronic transactions along.

The OEID will be used to identify other parties involved in medical transactions but aren't health plans. Third party administrators, transaction vendors, clearinghouses and other healthcare payers could be identified here as part of a standardization effort.

So far, non-HIPAA healthcare providers don't need national provider identifiers (NPIs). This proposed rule would broaden the requirement for providers to get NPIs in an effort to increase standardization and efficiency.

Return on Investment

This is the part that's going to make the AMA happy. The burden of implementing HPIDs - which could cost $650 million to $1.3 billion - is on the healthcare payers. The healthcare providers are expected to gain indirect rewards:

  1. "The cost avoidance of decreased administrative time spent by providers interacting with health plans"
  2. "A material cost savings through automation of processes for every transaction that moves from manual to electronic implementation"

The HHS admits that the ROI of $1 billion to $4.6 billion of savings is a guess that is expected to be realized over 10 years. The Medical Group Management Association (MGMA) said in 2009 the HPID could save $8.8 billion over 10 years by  improving health care transaction routing and health plan benefit administration.

Resources

  • Proposed Rule:Creating a HPID and changing the ICD-10 compliance date
  • Fact Sheet:HHS proposes a health plan identifier (HPID)
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