you, we strongly support the ANSI standards. That is the American-I am sorry, the American National Standard Institute, and it is a standard that all of us in health care are really working toward. When people talk to you about standards, there is currently a pharmacy standard, which is good; there is a national standard format, which is good, and used by Medicare. But beyond that, for the other EDI transactions, we support the ANSI standards. I have a red light on here, but I will make one final comment, if I may. In conclusion, we think there are two things that are utmost of importance in the bill. First of all, the system must be universal, allow all participants to compete and enter, and utilize standardized data. And second of all, it must be open. For example, if a participant can meet the standards and pass the accreditation, we feel they should be allowed to compete. With that, I would like to thank you for being here and appreciate it very much. [The prepared statement and attachment follow:] STATEMENT OF ASSOCIATION FOR ELECTRONIC HEALTH CARE TRANSACTIONS (AFEHCT) February 1, 1994 "Information Transfer Technology, Administrative Simplification and Health Care Reform" Mr. Chairman, Ladies and Gentlemen of the Subcommittee: My name is Jim H. Houtz and I chair the Association for Electronic Health Care Transactions (AFEHCT). Thank you for inviting us here today and for this opportunity to offer our thoughts and suggestions as to how the information transfer technology industry may support the nation's effort in simplifying the administrative processing of health care. AFEHCT is a membership association comprised of companies who are engaged in building that portion of the "electronic highway" that will be used to transmit and process health care data both financial and clinical. A list of our member companies is attached to the printed version of my testimony which has been filed with the Subcommittee. - Sometime this year, at a moment and time that perhaps will sneak by uncommemorated and virtually unnoticed except by those whose job it is to track these esoteric figures, spending on all aspects of health care in the United States will pass the annualized threshold of One Trillion Dollars ($1,000,000,000,000.00). By some estimates, as much as 30% of this is being spent on a combination of administrative overhead, duplicated and unnecessary services and administrative waste, fraud and abuse. The companies that comprise AFEHCT believe that they have and are in the process of developing the tools and the systems that will enable the health care industry better manage the delivery of care, reduce redundant and unnecessary or ineffective services, and eliminate much of the paperwork hassle that today comprises a significant portion of that waste. We are here today to both applaud the efforts that have been underway to promote these efficiencies and administrative simplifications and to encourage the continued support for this activity which has been accelerating in recent years. Without the tools and the systems being developed by AFEHCT members, meaningful health care reform will be virtually impossible to accomplish. Our major concern is that the initiatives already underway not be curtailed by the placing of artificial limits on the private sector or by any decision in structuring the network for information transfer and technology that would somehow stifle the private sector or inhibit free and open competition for new technology and new services. AFEHCT has adopted as its Mission Statement a basic commitment to the competitive process and to the private sector playing a key role in building this electronic network and processing system. Our companies have already made substantial headway in developing the system and designing the tools to make this vision a reality -- and we have done so entirely without a government mandate and without the "big stick" of government being waved over our heads. We stand ready and are prepared to make the even greater investment in capital equipment and in the development of computer software that will be necessary to make the future vision of an electronic highway for health care a reality but we need to know that the role of the private sector will be preserved and stimulated. Our Mission: To promote innovation, cooperation and open competition within the EDI health care industry and to improve the quality of health care and to achieve administrative cost savings can only be fulfilled if we approach the matter of health care information transfer technology and administrative simplification as a joint and cooperative effort between the government and the private sector. With these principles in mind, we have been closely monitoring the national debate over health care reform and have looked at not only the plan that has been proposed by President Clinton (the Health Security Act), but also at the other proposals that have so far been out forth, including the suggestions offered by the Chairman, and the outlines for Administrative Simplification contained in the plans suggested by Senator Chafee, incorporating the work in this area done by Senator Bond and his staff, Representative Cooper and Senator Breaux, and the suggestions put forward by several other organizations including the Work Group on Electronic Data Interchange (WEDI) and by others. The following are the guiding principles which we would hope will be included in any health care reform legislation: Governance and Regulation AFEHCT does not believe that an additional regulatory bureaucracy needs to be established in order to assure that the electronic highway for health care information can be safely navigated. While the Health Care Financing Administration (HCFA) and the Secretary of Health and Human Services have had considerable experience in these areas, we believe that any legislation should require the Secretary to continue to work with the industry and with those who have expertise in health care EDI and in privacy and confidentiality matters in establishing the standards and the guidelines needed for implementation. We suggest that any "Board," "Advisory Panel," or "Commission," established by legislation or by the Secretary, include at least one, but preferably more, representatives from the health care EDI industry. Networks and Data Systems In reviewing the several pieces of pending legislation now before this Subcommittee, AFEHCT is concerned that there has been a lack of clarity and specificity regarding the number and operation of the networks, clearinghouses and suggested "regional data centers and operational systems that may be established or which will be permitted to compete. AFEHCT believes that any legislation in this area should avoid dictating any single system or proposing a limit on the size or number of competing data processing systems. AFEHCT believes that the nation and the health care delivery system will be best served by a freely competitive marketplace wherein each EDI vendor and supplier is allowed to compete openly hospital by hospital, physician by physician, payer by payer, employer by employer, to provide such services competition that will assure both the latest technology and the lowest prices. The Subcommittee should maintain oversight authority and continuously monitor how the health care EDI industry is meeting the nation's need for innovation and value of services. - Universal Identification AFEHCT supports and encourages the development of a unique numbering system to identify patients, payers and providers of care. Electronic Cards but consistent AFEHCT suggests that the issuance of "cards" and the content and control of the information contained thereon needs to be fully evaluated and the cost and feasibility of maintaining electronic records through such a medium and the cost of maintaining a back-up central system, needs to be considered. Health Care Information Transactions AFEHCT supports the development of an open network access system, with all payers and employers working with EDI network vendors and suppliers to foster interconnectivity for all health care EDI transactions -- administrative, financial and clinical. Payers and employers must make this information available to providers and their support systems without separate fees and charges and this must be made a condition of their participation in the network. Privacy and Confidentiality AFEHCT supports the development of comprehensive safeguards for personallyidentifiable patient care records and calls for strong compliance assurances from all participants in the communication network. We caution, however about controls and limitations which would unnecessarily burden the electronic process by requiring redundant paper back-up and notifications to individuals. The development of standards and protocols for the delivery of health care offers the best hope for improving both the quality of such care and the needed control over utilization and potential waste and duplication of A balance between personal privacy protection and the need for collecting and measuring such data needs to be established. This will not be an easy task and it is one where the government needs to play a pivotal role. care. - There must be a fail-safe system for the privacy of individuals but at the same time some protection to participating EDI companies to encourage system developers to continue their work in electronic communications. Proposals for civil monetary damages must be tempered by allowing vendors and service agents to establish as an affirmative defense that they have complied with all disclosure requirements. ANSI Standards AFEHCT endorses the use of those standards that have been and are being developed by the X.12 Committee of the American National Standards Institute for implementation throughout the health care information transfer technology industry. While the industry is moving to adopt these standards on its own, there have been roadblocks in this development that may be appropriately addressed by the government. AFEHCT's major concern here is that there may be a tendency to make any initially-adopted standard, a rigid and unchanging mandate. Any mandate for standards needs to allow for their periodic review and revision so that the standards in use may also evolve in tune with new technology and with the innovations and inevitable changes in the EDI networks. Standards Implementation While supporting ANSI standards for the industry, AFEHCT suggests to the Subcommittee that merely "proclaiming” a standard does not go far enough and that some oversight needs to be maintained to assure uniformity both in the timing of any standard throughout the whole industry and in the protocols and edits that are incorporated by all of the players into their electronic systems. Accreditation AFEHCT supports and has set on the design and implementation of an industry accreditation program for all suppliers, vendors, clearinghouses and value-added network operators. Our members are funding the development of quality and utilization for the network standards and are working with both payers and providers in devising a program to apply these standards to the industry. Dynamic Software AFEHCT supports the use of private sector-developed and supplied software to meet the continuously changing and growing requirements of the health care industry in satisfying the nation's need for health care services. Pre-Emption of State Laws Currently a myriad of state laws exist which in many cases impede the development of electronic networking and administrative simplification. Many of these laws, known as "quill-pen" laws, currently require handwritten documents and signatures on most medical records. These must be pre-empted by new Federal legislation. We support the development of national rather than regional or state standards that would promote the development of electronic authorizations and alternatives for maintaining and verifying such records. CONCLUSION AFEHCT applauds the effort of this Subcommittee and supports the initiative included in virtually all the health care reform proposals now before you to simplify the administrative process and to begin the process of implementing standards and protocols by which the latest in computer networking and communication systems may be utilized to help in not only reducing the costs of administering the day-today operations of the health care system, but in developing new management tools, utilization controls and cost outcomes evaluation measurements. The system that must be promoted will incorporate at least the following: System must be UNIVERSAL and utilize STANDARDIZED It will use a single national system of standards for processing of claims, including a universal billing form, common eligibility (ie., "swipe" card) inquiry and "coordination of benefit” standards, common managed care authorization and pre-certification protocols, uniform claims adjudication processes, simplified claims tracking and payment review procedures, including electronic funds transfer. It will incorporate common audit review and utilization control mechanisms and standardized record-keeping coupled with medical records privacy controls. It will enable program managers to see on a real-time basis actual trends in the delivery of care and to identify cost efficiencies as well as inefficient delivery capabilities. System must be OPEN, permitting all players Present system of closed competition and federally-supervised monopolies in administration of government health care programs has stifled innovation and has not encouraged the maximum technology. use of Suppliers of technology and services will compete on the open market not only for price but for "bells and whistles," technology advances and improved systems. I thank you once again for the opportunity to present the vision that our members have for the industry and we look forward to seeing this vision fulfilled as part of the nation's efforts toward health care reform. |