Are you Experienced? A Look at the HPID Application Experience
Under final rules issued September 5, 2012 by the Department of Health and Human Services under HIPAA, nearly all employer group health plans are required to obtain a unique health plan identification number (HPID) by November 5, 2014. (We summarize the final rules briefly here.) Health plans with less than $5 million in annual receipts have until November 5, 2015 to comply. With less than three weeks to go until the deadline, employers still have questions about the requirements and the application process. From what we have heard from some clients, the application process can take at least a couple of days so don't wait until November 5 to get started.
Who Must Obtain an HPID?
A self-insured group health plan that is a "controlling health plan" must obtain an HPID, even if the plan has contracted with a third party to administer its health plan operations. Generally, a self-insured health plan will be a "controlling health plan" if it: (1) is an individual or group health plan that provides or pays the cost of medical care; and (2) controls its own business activities, or is controlled by an entity that is not a health plan. Obtaining a separate HPID is optional for "sub-health plans," which are described as health plans whose business activities are directed by a controlling health plan. Recent guidance clarifies that FSAs and HSAs are not required to obtain an HPID. HRAs that cover only deductible or out-of-pocket costs are also exempt from the HPID requirement.
A controlling health plan may apply for a single HPID for its own use and for use by its sub-health plans, or each sub-health plan may obtain its own HPID. For example, if an entity has a self-insured "wrap" plan document that acts as an umbrella plan for all of its benefit options, the rules appear to allow the wrap plan to act as the controlling health plan and obtain a single HPID to be used by the wrap plan and the self-insured benefit plan options available under it (that is, its sub-health plans). Alternatively, the sub-health plans may elect to obtain their own HPIDs. Insurance carriers for any fully-insured health plan benefit options are responsible for obtaining HPIDs on behalf of such plans.
When to Obtain an HPID
Both controlling health plans and sub-health plans have until November 5, 2014 to obtain an HPID. Small health plans that report annual receipts of $5 million or less (not to be confused with sub-health plans) will have an additional year to obtain an HPID. HPIDs must be used in all standard transactions beginning November 7, 2016.
Self-insured health plans may authorize a third-party administrator to obtain an HPID on its behalf, but the HPID will belong to the health plan and it remains the obligation of the health plan to ensure the HPID is obtained by the deadline.
How to Obtain an HPID
To obtain an HPID the health plan must follow the application and submission instructions provided by the Centers for Medicare and Medicaid Services (CMS) at https://portal.cms.gov. The process involves three steps: (1) creating an account in the CMS Enterprise Portal to obtain a user ID and password; (2) registering in the Health Insurance Oversight System (HIOS); and (3) applying for an HPID using the Health Plan and Other Entity Enumeration System (HPOES). CMS has provided a quick reference guide and detailed user manual explaining the process.
Only once a CMS profile has been created and the health plan has registered with HIOS may it actually initiate the HPID application process. Health plans must be prepared to provide detailed information about the applying entity, the individual submitting the application, and the "authorizing official" who must be someone with the authority to bind the entity submitting the HPID application. The CMS user manual requires review and approval of a submitted application by the authorizing official. Recently, however, CMS appears to have waived the step requiring approval by the authorizing official and has assigned HPID numbers immediately following initial submission of the application. It is not clear whether CMS will continue this practice or begin requesting approval of the submitted application by an authorizing official.
Although the deadline is November 5, health plans are well-advised not to wait until the last minute to begin the application process. In the experience of at least one of our clients it took three full days to complete the steps described above as a result of waiting for the HIOS helpdesk to provide certain information required to proceed to the next step in the process. Moreover, gathering the required information and completing the required forms may take considerably longer than the 30 minutes estimated by HHS.
CMS has provided substantial guidance detailing the HPID application procedure. Before initiating this process, however, a self-insured health plan must determine whether it is a controlling health plan, whether its sub-health plans will be obtaining HPIDs, and which individuals will undertake the application process. Health plans should allocate sufficient time to complete both the planning and application phases of the process before the November 5 deadline.