NU Online News Service, Oct. 8, 2003, 5:20 p.m. EST – The Centers for Medicare & Medicaid Services have exempted flexible spending account debit card transactions from the new federal electronic data interchange requirements.

One section of the Health Insurance Portability and Accountability Act soon will require insurers to accept claims in a standard EDI format.

Congress required EDI standardization in an effort to streamline U.S. health finance administration and encourage U.S. doctors to file more claims electronically.

Evolution Benefits Inc., Avon, Conn., sent CMS a letter asking CMS whether officials would apply the HIPAA EDI standardization requirements to card-based systems for processing employees’ FSA claims.

CMS officials replied in an Oct. 2 letter that using an FSA debit card to pay for health care products and services is comparable to paying with a conventional credit card

“Debit card transmissions are not subject to HIPAA EDI requirements,” the CMS officials told Evolution. “This is because it is considered a transaction between the beneficiary and a provider, not a health plan and provider.”

The ruling should help all companies that are trying to develop card-based FSA administration systems, not just Evolution, according to Evolution Chairman Robert Patricelli.

“Requiring administrators who use debit cards in connection with FSAs to comply with HIPAA EDI requirements would have added very substantial administrative complexity and cost to a process that debit cards were designed to simplify,” Patricelli says in a statement about the CMS letter. “We are grateful for the prompt and positive response we received from CMS on this issue.”