Officials at the U.S. Department of Health and Human Services (HHS) are hoping they can start giving health plans Health Plan Identifier (HPID) numbers Oct. 1.

HHS officials describe their vision of the HPID system in proposed HPID regulations that are on track to appear in the Federal Register April 17.

In the same document, HHS officials have proposed postponing the date when U.S. health care organizations must shift to using the International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM), from the ICD-9 system to Oct. 1, 2014, from Oct. 1, 2013.

HHS developed the HPID regulations to implement Section 1104 of the Patient Protection and Affordable Care Act of 2010 (PPACA), which requires HHS to set up a standard unique health plan identifier system.

The Supreme Court is weighing the constitutionality of PPACA, and PPACA opponents are working in Congress to try to get the law repealed. The HPID project could survive even if the rest of PPACA dies because the HPID project is a sister to other HHS identification number projects spawned by the Health Insurance Portability and Accountability Act of 1996 (HIPAA)

HHS created a HIPAA-related unique employer identifier in 2002 and a HIPAA-related National Provider Identifier (NPI) system in 2004. 

Health plans still use several types of identification codes, including taxpayer identification numbers, employer identification numbers (EINs), proprietary codes, and identification numbers provided by the National Association of Insurance Commissioners (NAIC), Kansas City, Mo.

“Not only are health plans identified using a variety of identifiers, but these identifiers have different formats,” officials say in a preamble to the proposed regulations. “For instance, some identifiers are alphanumeric, while other identifiers are only numeric. Identifiers also differ in length; for example, NAIC codes are typically 5 digits while an EIN is 9 digits.”

Because of the lack of a standardized plan ID system, doctors and hospitals face problems such as “rejected transactions due to insurance identification errors, difficulty in determining patient eligibility, and challenges resulting from errors in identifying the correct health plan during claims processing,” officials say.

PPACA Section 1104 requires HHS to make an HPID system rule effective by Oct. 1, 2012.

Some public commenters told an advisory panel helping HHS develop the HPID system, the National Committee on Vital and Health Statistics (NCVHS), that they would like to see plans get ID numbers at the parent company level. In that system, XYZ Insurance Company would get an ID number, but its Deluxe Porsche Plan and its Bargain Hunter’s Delight Plan would not.

Other commenters asked HHS to create two types of ID codes: One code system for health plans, and second code system for other types of health care organizations, such as long-term care insurance (LTCI) plans and “third party administrators” (TPAs), or independent plan administrators.

Some commenters wanted the ID system to be specific enough that the provider could use the code to look up the fee schedule for a plan a patient was using.

Carriers and others argued that building product-level information into the HPID would make the HPID system too complicated and expensive, officials say.

HHS officials say they are thinking about creating one HPID system that would serve two types of users: “Controlling Health Plans” (CHPs) and “Subhealth Plans” (SHPs).

The CHP and SHP definitions is based on an HHS definition of health plan that includes health insurers and health maintenance organizations (HMOs).

The health plan definition also includes a group health plan with 50 or more participants and a group health plan of any size that is administered by an insurer or a TPA.

The health plan definition appears to exclude an employer-sponsored group health plan with 49 or fewer employees that is administered by the employer.

The CHP definition in the proposed regulations would include a health plan that controls its own business activities or is controlled by an entity other than a health plan. A CHP would have to get an HPID number.

The proposed rule would define an SHP as a health plan controlled by a CHP. An SHP could choose between using its parent CHP’s HPID or getting its own HPID. Either the CHP or the SHP could apply for an HPID for the SHP.

The HPID number itself would be a 10-digit, all-numeric identifier with a Luhn check-digit as the 10th digit. The check digit is a number that can be used to verify whether the card number appears to be correct, officials say.

Self-insured group plans with 50 or more participants and self-insured group plans administered by outside entities would be classified as CHPs.

HHS wants to give out HPID numbers from Oct. 1, 2012, through March 31, 2013; test the numbers from April 1, 2013, through Sept. 30, 2013; and put the numbers into active use Oct. 1, 2013.

Officials are estimating the transition could cost commercial and government health plans $652 million to $1.3 billion during the first 3 years the HPID system was in effect.

The HPID system could save plans a total of about $1.3 billion to $2.5 billion over the period starting in 2015 and ending in 2014, officials say.

The HPID could save physicians $1.3 billion to $2.7 billion from 2015 to 2024 simply by decreasing the amount of time their practices spend interacting with health plans, officials say.

Health care providers of all kinds could generate about $1.6 billion to $3.3 billion in HPID-related savings of all kinds over that period, with the projected gross return on investment ranging from $746 million to $2.8 billion, officials say.

Comments on the proposed regulations will be due 30 days after the official Federal Register publication date.