Group health plan sponsors and administrators focused on compliance with ACA’s shared responsibility rules might not be aware that another compliance deadline is looming.   By November 5, 2014, most group health plans must apply to the Centers for Medicare & Medicaid Services (CMS) for a unique health plan identifying number.  (Please visit the “Deadlines” page of our blog for information about other approaching deadlines.)

Uniform Standards for Electronic Transactions

The uniform health plan identifying number (HPID) is part of a larger effort to improve electronic health transactions.  The Health Insurance Portability and Accountability Act required the Department of Health and Human Services to establish uniform standards for electronic data transmission between group health plans and health care providers such as doctors, pharmacies, and hospitals.  Once HHS establishes a standard for a particular transaction, the parties must conform to the standard when they conduct the transaction electronically.

In order to facilitate electronic transactions, each health plan must use a unique 10-digit health plan identifying number in standard transactions.   Most employer group health plans with 50 or more participants (and smaller plans administered by an outside vendor) are subject to the electronic transaction standards, including the requirement to obtain an HPID.

Obtaining a Health Plan Identifying Number

CMS has issued a final rule and corrections implementing the HPID requirement.  Most group health plans must apply to CMS for an HPID by November 5, 2014.  Plans with annual receipts of $5 million or less have an extra year to obtain an HPID.

A self-insured health plan must obtain an HPID even if the plan conducts standard transactions through a third-party administrator or other vendor, since the vendor is required to use the HPID in any standard transaction that identifies the plan.  A vendor may also apply for its own identifying number, called an “other entity identifier” (OEID).  The insurer will apply for an HPID for an insured plan.

A health plan’s representative must submit an on-line application for an HPID through the “Health Plan and Other Entity Enumeration System” maintained by CMS.  Information about the application process is available here.  Although the plan sponsor’s administrative staff (or an outside vendor) may provide the basic information requested by the application form, the application must be approved by an “authorizing official.” An “authorizing official” is an executive of the plan sponsor who has authority to enter into binding legal agreements on behalf of the plan.

CMS staff estimate that it will take less than 24 hours to issue an HPID once a plan sponsor completes its application.  We suggest that employers allow some extra time for unanticipated technical problems, however.

Controlling Health Plans and Subhealth Plans

The final regulation distinguishes between a “controlling health plan,” which must obtain its own HPID, and a “subhealth plan,” which may either obtain its own HPID or use the HPID of its controlling health plan.  A controlling health plan controls its own activities and policies, or is controlled by an entity (such as an employer) that is not a health plan; a subhealth plan’s activities and policies are directed by a controlling health plan.

This distinction is designed mainly for hospitals, HMOs, insurers, and other entities that are in the business of providing health care or health coverage through parent-subsidiary groups and similar structures.   It is not at all clear how the “controlling health plan” and “subhealth plan” concepts apply to self-insured employer group health plans, which might include a number of different benefit options and payment structures under a single administrative umbrella.  For example, if an employer wishes to track enrollment and claims data separately for different benefit options under a single group health plan, may the employer treat each option as a subhealth plan and obtain separate HPIDs, or must the employer treat all of the options as part of a single controlling health plan?  If the employer’s health plan provides coverage through HMOs in certain geographic regions, are the HMOs separate controlling health plans (because they control their own activities and policies), even though they provide benefits under the employer’s plan?

To make matters more confusing, CMS’s on-line application system currently recognizes only one controlling health plan for each employer identification number (EIN).  For example, if an employer maintains separate group health plans for union-represented active employees, non-union active employees, and retirees, the employer probably sponsors at least three controlling health plans and needs three HPIDs; but the CMS system will issue only one HPID under the employer’s EIN.  CMS has promised to fix this problem, but employers might wish to wait until the solution is in place before they apply for HPIDs.

Using the Health Plan Identifier

A group health plan is not required to use the HPID in standard electronic transactions until November 7, 2016.  Once a plan sponsor has obtained an HPID for a self-insured group health plan, however, the sponsor should share the HPID with the plan’s third-party administrators and other business partners so that they can incorporate it in their administrative systems and processes.

A plan sponsor is permitted (but not required) to use the HPID to identify the group health plan in circumstances other than standard transactions.  For example, the plan sponsor could use the HPID in the plan’s internal records, on member identification cards, or in material available to health care providers.  Group health plan sponsors might wish to consider whether it would be helpful to use the HPID in situations where it is not required.

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Photo of Amy N. Moore Amy N. Moore

Amy Moore advises public and private companies and tax exempt organizations on a wide range of tax, ERISA, and employment law issues concerning all types of benefit programs.  Ms. Moore counsels some of the world’s largest multinational companies on the design and implementation…

Amy Moore advises public and private companies and tax exempt organizations on a wide range of tax, ERISA, and employment law issues concerning all types of benefit programs.  Ms. Moore counsels some of the world’s largest multinational companies on the design and implementation of innovative benefit strategies, including the restructuring of retirement programs to meet the needs of the modern work force; the use of surplus pension and insurance assets to provide non-traditional benefits; and the establishment of funding and security arrangements for welfare plans and executive compensation.  She represents clients in connection with pension fund investments in private equity funds, hedge funds, group trusts, and derivatives.  She also advises on benefits and compensation issues in acquisitions and divestitures, debt finance, joint ventures, and other corporate transactions.  Ms. Moore represents companies in audits and contested agency proceedings involving benefit plans and advises clients on employee benefits issues that arise in connection with ERISA litigation and settlements.  She also counsels employers on issues of plan administration and the correction of operational problems under government-sponsored remedial programs.