Technology in Total Rewards

Online Health Plan Administration

The move to online health plan administration is due to three major pieces of federal legislation in the United States:

• The Health Insurance Portability and Accountability Act (HIPAA) of 1996
• Taxpayer Relief Act of 1997
• Electronic Signature Act of 2000

Next, let's examine how each of these acts impact online health plan administration.

HIPAA

The Health Insurance Portability and Accountability Act (HIPAA) of 1996 has been described as the largest paper reduction legislation in the history of the United States. In addition to replacing paper with electronic transactions, it creates the opportunity to replace many "processes" used in benefits administration.

The original HIPAA regulations were modified (in August of 2000) by the Health Care Financing Administration to implement the Electronic Data Interchange (also known as EDI) and Medical Code Standards. Compliance with these regulations was required by October 16, 2002 for most plans. The regulations require most health plans to conduct "standard" health care transactions electronically, or to retain a third party health care clearinghouse that can do so on their behalf. Regulations simplifying administration, including privacy and security, also became effective in 2002.

Due to these regulations, health plans accept electronic transactions not only from physicians and hospitals, but also eligibility and benefit inquiries. Review of claims status and coordination of benefits between health plans occur electronically. As a result, the majority of health care organizations have implemented changes to all of their systems, making the electronic submission of data such as eligibility and claims inquiries not only possible, but in some cases mandatory.

For those employers that simply pay for health coverage provided by a third party, they are not required to transmit all data electronically. However, an employer that self-administers its health plan must comply with the EDI requirements. In addition to health plans, the final EDI rules state that limited scope coverage, such as dental and vision plans, are also required to comply with the new online transmission regulations.