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HIPAA Electronic Transaction Standards

Proposed Rule

Score: 25 / 60

RULE SUMMARY

This rule proposes to adopt updated versions of the standards for electronic transactions originally adopted in the regulations entitled, ‘‘Health Insurance Reform: Standards for Electronic Transactions,’’ published in the Federal Register on August 17, 2000, which implemented some of the requirements of the Administrative Simplification subtitle of the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

METHODOLOGY

There are twelve criteria within our evaluation within three broad categories: Openness, Analysis and Use. For each criterion, the evaluators assign a score ranging from 0 (no useful content) to 5 (comprehensive analysis with potential best practices). Thus, each analysis has the opportunity to earn between 0 and 60 points.

CriterionScore

Openness

1. How easily were the RIA , the proposed rule, and any supplementary materials found online?
The proposed rule and RIA could be found on regulations.gov using keyword or RIN search. They can also be found on the HHS Web site by searching on the name of the regulation, picking a press release about it out of a list of documents, and then going to a page devoted to these regulations from a link in the press release. In other words, the materials are on the HHS Web site (four clicks from the homepage including the search) but difficult to find.
4/5
2. How verifiable are the data used in the analysis?
The actual RIA in the NPRM relies heavily on data whose sources are not listed or that come from "interviews and studies." Links are only provided to some data sources. A supplementary document from Gartner Inc. helps in this regard. However, the RIA merely mentions that Gartner did surveys without explaining that a specific document is available, or how to get it.
3/5
3. How verifiable are the models and assumptions used in the analysis?
It is impossible to tell, for the most part, whether the assumptions and models are verifiable. Some are cited, but most of the assumptions are not justified.
2/5
4. Was the analysis comprehensible to an informed layperson?
Parts of the RIA are only comprehensible after reading the rulemaking and becoming familiar with the jargon; other than that, it is clear and well organized. The analysis is fairly clear—detailed but not complex. It was a more of a tedious read than many other RIAs, though.
3/5

Analysis

5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?
3/5
Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life?
Page 49762 lists several benefits stemming from lower transaction or claims processing costs.
5/5
Does the analysis identify how these outcomes are to be measured?
Three benefits are quantified: cost savings from fewer callbacks, increased adoption of electronic transactions, and increased use for additional (auxiliary) transactions. Two benefits are not quantified: wider adoption of standards and decreased manual intervention.
4/5
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes?
Causation seems pretty straightforward, but there is little explicit theory beyond "increased adoption will lead to the specified cost savings."
2/5
Does the analysis present credible empirical support for the theory?
Most support for the theory of how the new standard will lead to benefits is sourced to "interviews" without a lot of additional explanation.
2/5
Does the analysis adequately assess uncertainty about the outcomes?
Ranges are presented but likelihood is not evaluated.
3/5
6. How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve?
1/5
Does the analysis identify a market failure or other systemic problem?
Need for this action is repeatedly asserted.
1/5
Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal?
HHS repeatedly asserts that it must set these particular standards, but does not present a theory of why the industry will not converge on a standard, or interoperable standards, in the absence of HHS action.
1/5
Does the analysis present credible empirical support for the theory?
There isn’t much of a theory, just scattered assertions or facts that might show HHS is right.
1/5
Does the analysis adequately assess uncertainty about the existence or size of the problem?
The problem is assumed to exist with 100% certainty.
0/5
7. How well does the analysis assess the effectiveness of alternative approaches?
2/5
Does the analysis enumerate other alternatives to address the problem?
Several alternatives are mentioned (listed below), including no action.
4/5
Is the range of alternatives considered narrow (e.g., some exemptions to a regulation) or broad (e.g., performance-based regulation vs. command and control, market mechanisms, nonbinding guidance, information disclosure, addressing any government failures that caused the original problem)?
The range of alternatives is pretty narrow. Most options involve delays, staggered implementation, or exemptions. The no action alternative was at least considered.
2/5
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved?
There are no calculations, but the analysis often claims that an alternative will not produce the benefits and provides a rationale.
2/5
Does the analysis adequately address the baseline? That is, what the state of the world is likely to be in the absence of federal intervention not just now but in the future?
The analysis simply assumes that the baseline will be no change in adoption or use of electronic transactions.
1/5
8. How well does the analysis assess costs and benefits?
2/5
Does the analysis identify and quantify incremental costs of all alternatives considered?
Thorough identification of costs for the rulemaking option; however, no costs are identified for the few alternatives listed.
3/5
Does the analysis identify all expenditures likely to arise as a result of the regulation?
It appears as if the RIA has done a thorough job, however with many assumptions and unverifiable data, it is impossible to tell.
3/5
Does the analysis identify how the regulation would likely affect the prices of goods and services?
The analysis does not discuss how costs or benefits would filter downstream to the public.
0/5
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation?
Some of these costs/benefits are accounted for (such as more entities switching to electronic records); however, costs/benefits from the potential for different quantities of healthcare demanded are not considered.
2/5
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis?
The RIA summary, included in the final rule, conducts sensitivity analysis. Furthermore, a range of costs and benefits are provided in certain cases.
4/5
Does the analysis identify the alternative that maximizes net benefits?
A qualitative discussion dismisses all other alternatives as unable to produce benefits as high as the option chosen.
1/5
Does the analysis identify the cost-effectiveness of each alternative considered?
The discussion asserts other options aren't effective. There is no explicit discussion of cost-effectiveness.
1/5
Does the analysis identify all parties who would bear costs and assess the incidence of costs?
There's an extensive analysis of costs borne by different kinds of providers of different sizes. The only thing missing is a discussion of how those costs affect ultimate payers—patients and government.
4/5
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits?
There's an extensive analysis of benefits received by different kinds of providers. The only thing missing is a discussion of how these benefits affect ultimate recipients—patients and government.
4/5

Use

9. Does the proposed rule or the RIA present evidence that the agency used the analysis?
Other alternatives are ruled out based on assertions that they won’t produce the desired benefits, without much in-depth analysis. The fact that the benefits outweigh the costs may have affected the decision to propose this regulation, but it's not clear whether the analysis drove the decision or merely justified a decision reached for other reasons.
1/5
10. Did the agency maximize net benefits or explain why it chose another alternative?
The option chosen is presented as the only effective option, but analysis of this is not very extensive; there no benefit-cost calculations for the other options.
1/5
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future?
There are no real goals; however, it could be assumed that the number of entities using electronic transactions due to the new standard will be monitored.
1/5
12. Did the agency indicate what data it will use to assess the regulation's performance in the future and establish provisions for doing so?
The RIA quantifies cost savings from fewer callbacks, increased adoption of electronic transactions, and increased use for additional (auxiliary) transactions. If these were monitored ex post, the results would provide a good evaluation of some of the actual benefits.
2/5
 
Total25 / 60

Additional details

Agency
Department of Health and Human Services
Regulatory Identification Number
0938-AM50
Agency Name
Department of Health and Human Services
Rule Publication Date
08/22/2008