As Deadline Nears, Health Plan Identifier FAQs and Reference Guide Address Questions | Practical Law

As Deadline Nears, Health Plan Identifier FAQs and Reference Guide Address Questions | Practical Law

The Centers for Medicare & Medicaid Services (CMS) has issued FAQs and a reference guide for use by certain health plans in obtaining health plan identifiers (HPIDs). HPIDs are required for identifying plans in standard electronic transactions under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). 

As Deadline Nears, Health Plan Identifier FAQs and Reference Guide Address Questions

Practical Law Legal Update 8-582-6445 (Approx. 6 pages)

As Deadline Nears, Health Plan Identifier FAQs and Reference Guide Address Questions

by Practical Law Employee Benefits & Executive Compensation
Published on 30 Sep 2014 • USA (National/Federal)
The Centers for Medicare & Medicaid Services (CMS) has issued FAQs and a reference guide for use by certain health plans in obtaining health plan identifiers (HPIDs). HPIDs are required for identifying plans in standard electronic transactions under the Health Insurance Portability and Accountability Act of 1996 (HIPAA).
The Centers for Medicare & Medicaid Services (CMS) has issued a reference guide (Guide), also available in text format, and a set of FAQs for use by controlling health plans (CHPs), both insured and self-insured, in obtaining health plan identifiers (HPIDs). Under a requirement that applies to large health plans beginning this November, HPIDs must be used to identify health plans in certain standard electronic transactions under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and other contexts requiring identification of health plans (see Practice Notes, Health Plan Identifiers and HIPAA Electronic Transactions under the ACA).

HPID Requirements

The HPID requirements apply to two types of health plans:
  • CHPs must obtain HPIDs.
  • Subhealth plans (SHPs) may, but are not required to, obtain HPIDs.
A CHP is a health plan that:
  • Controls its own business activities, actions or policies, or is controlled by a non-health plan entity (for example, a holding company).
  • If it has an SHP, exercises enough control over the SHP to direct the SHP's business activities, actions or policies (see Practice Note, Health Plan Identifiers: Controlling Health Plans).
An SHP is a health plan whose business activities, actions or policies are directed by a CHP. Although a CHP must obtain an HPID for itself, it has discretion regarding how many HPIDs to obtain for its SHPs, depending on its organizational structure and business needs.
The deadlines for health plans to obtain HPIDs are based on a plan's size. The compliance date by which large health plans must:
  • Obtain an HPID is November 5, 2014.
  • Use their HPID in HIPAA standard transactions is November 7, 2016.
The compliance date by which small health plans, that is, plans with annual receipts of $5 million or less (45 C.F.R. § 160.103), must:
  • Obtain an HPID is November 5, 2015.
  • Use their HPID in HIPAA standard transactions is November 7, 2016.
CHPs obtain an HPID through the enumeration system, which assigns HPIDs through an online application process.

Reference Guide

The process for obtaining an HPID involves registering for and accessing the following two systems:
  • The Health Insurance Oversight System (HIOS).
  • The Health Plan and Other Entity System (HPOES).

Obtaining a CHP HPID

Initial access to both systems is available through the CMS Enterprise Portal, though new users must first register on the portal (which involves consenting to being monitored and submission of identifying information). CHPs will receive an e-mail confirmation of their registration.
Once registered through the portal, CHPs must:
  • Register for an HIOS Account and Access HIOS. CHPs must obtain access to HIOS through the portal, which they can do on the HIOS user registration page. The Guide includes instructions for this process. Once registered to use HIOS, CHPs will receive an e-mail containing the HIOS authorization code, and these credentials may be used to access the HIOS homepage.
  • Register the Organization in HIOS. On the HIOS homepage, CHPs can search for their entity, by federal employer identification number, to determine if the entity is already registered in HIOS. If it is not, CHPs must register their organization. They will receive an e-mail notification once the organization has been reviewed and approved by the HIOS helpdesk.
  • HIOS Role Management. Following registration, CHPs must select a "role" that allows them to access the HPOES, through which the HPID is actually requested and assigned.
  • Complete HPID Application Through HPOES. Once in HPOES, CHPs will complete the steps needed to apply for HPIDs, which involve creating a profile and providing more information. An email notification will be provided when the application is submitted and is awaiting approval.

Frequently Asked Questions

In addition to the Guide, CMS issued a set of FAQs addressing the HPID requirements. The FAQs address a number of issues, including:
  • Insured Plans. According to CMS, the health insurer of a fully-insured CHP is the entity that "controls" the CHP, and so the insurer must obtain the HPID for the fully-insured plan. Individual employer plans are SHPs to the fully-insured CHPs, and (under the HPID regulations) may, but are not required to, obtain HPIDs (see HPID Requirements).
  • HPID Uses. An FAQ indicates that health plans are free to use their HPIDs for any lawful business purpose.
  • Plans Subject to HPID Requirements. Another FAQ concludes that a health plan that satisfies the definition of health plan (under 45 C.F.R. § 160.103) must obtain an HPID even if it does not conduct standard transactions (45 C.F.R. § 162.506). Plans that are CHPs must obtain an HPID.
  • Third-party Administrators (TPAs). In an FAQ, CMS recognizes that many self-insured plans contract with TPAs to administer their health plan operations, and may not be aware of the HPID requirements. Nonetheless, a TPA acting on a plan's behalf is not a health plan, and need not identify itself as a health plan in standard transactions. A plan may authorize an entity (for example, its TPA) to obtain an HPID on its behalf, though the HPID will belong to the plan and not the TPA.
In a more detailed FAQ, CMS addresses:
  • The meaning of a "small" health plan for HPID purposes (that is, a health plan with annual receipts of not more than $5 million) (see HPID Requirements).
  • What an organization should do if it does not have annual receipts.
According to CMS, a health plan that files certain federal tax returns and report receipts on those returns should calculate annual receipts using guidance provided by the Small Business Administration (13 C.F.R. § 121.104). A plan that does not report receipts to the IRS (for example, ERISA group health plans that are exempt from filing income tax returns) should use proxy measures to determine their annual receipts.
The annual receipts calculation may vary depending on how a plan pays for benefits, as follows:
  • Fully insured health plans should use the amount of total premiums they paid for health insurance benefits during the plan's last full fiscal year.
  • Self-insured plans, both funded and unfunded, should use the total amount paid for health care claims by the employer, plan sponsor or benefit fund, on the plan's behalf during the plan's last full fiscal year.
  • Plans that provide health benefits through a combination of insurance and self-funding should combine proxy measures to determine their total annual receipts.
In another FAQ, CMS addresses how plans that do not have a National Association of Insurance Commissioners (NAIC) number or Payer ID should go about obtaining HPIDs. Specifically, these plans should enter “NOT APPLICABLE” in the required Payer ID field of the HPOES (see Reference Guide).

Process for Self-insured Plans

Another FAQ sets out a two-part process for self-insured plans to determine whether they are subject to the HPID requirements. First, the plan must determine whether it meets the definition of health plan (45 C.F.R. § 160.103). Under this definition, a health plan is an individual or group plan that provides or pays the cost of medical care (as defined in 45 C.F.R. § 160.103). Second, assuming the plan meets the definition of a health plan, it must then determine whether it is a CHP.

Health FSAs, HRAs, HSAs, Wrap Plans and Cafeteria Plans

An FAQ addresses whether the following plans and arrangements must obtain HPIDs:
  • Flexible spending arrangements (FSAs) and health savings accounts (HSAs), which are individual accounts directed by an individual, do not require HPIDs (see Practice Notes, Cafeteria Plans and Defined Contribution Health Plans).
  • Health reimbursement arrangements (HRAs) may require an HPID if they meet the definition of health plan. However, HRAs that cover deductibles only or out-of-pocket costs need not obtain HPIDs.
Wrap plans and cafeteria plans may consist of combinations of health plan arrangements (that is, self-insured, fully-insured, FSA, HSA and HRA). According to CMS, the rules governing these types of plans are the same as for the individual plan types. For example, a wrap plan that includes a fully-insured health plan, self-insured dental plan, and HRA that covers deductibles, would require the employer to obtain an HPID only for the self-insured dental plan. The insurer would be responsible for obtaining the HPID for the fully-insured health plan. Because the HRA only covers deductibles, an HPID is not required.

Practical Impact

Although distilled to a two-page guide, the HPID application process includes multiple system registration requirements and many unfamiliar terms and acronyms. CHPs may wish to give themselves extra time to navigate this process in advance of the upcoming HPID compliance dates. In addition, a lengthy user manual provides a more thorough discussion of the HPID application process.
The FAQs offer some helpful clarifications, particularly as to allocating responsibility between insurers and employers, for obtaining HPIDs in the insured plan context. Employers may want to consult these FAQs as they go about complying with the HPID requirements.