Deadline for Health Plans to Acquire Unique Health Plan Identifier Fast Approaching

Under the Affordable Care Act (ACA) and the Health Insurance Portability and Accountability Act (HIPAA), health plans that are "Controlling Health Plans" ("CHPs") are required to obtain a unique health plan identifier (HPID) from the Department of Health and Human Services (HHS). The HPID will be used to identify the plans in HIPAA covered standard transactions, e.g., claims processing where the health plan is identified. Currently, different identification numbers can be used by different associated entities. The new requirements allow for only one identifying number per CHP.

The final regulations require that CHPs that are not considered small plans obtain a unique HPID by November 5, 2014. Small plans (those with annual receipts of $5 million or less) have until November 5, 2015, to obtain an HPID. Covered entities (health plans, and business associates, including entities that perform plan related functions such as third party administrators, fund offices, and clearinghouses) will need to refer to the HPID to identify the health plan in covered transactions starting November 7, 2016.1

Action to Take: Health plans that are CHPs and have not yet obtained an HPID should take action to do so before November 5, 2014, unless they are small plans.

A CHP is defined as a health plan (an individual or group plan that provides or pays the cost of medical care (as defined in 45 CFR 160.103)) that:

  1. controls its own business activities, actions, or policies; or
  2. (i) is controlled by an entity that is not a health plan; and (ii) if it has a subhealth plan (SHP), exercises sufficient control over the subhealth plan to direct its business activities, actions, or policies.

Cheiron Observations: This definition is broad and will include multiemployer health plans, single employer plans, and public sector plans. The definition of a CHP raises many questions as to how it applies in a particular situation. For example, is the control merely potential control or actual control? What if there is control of some activities and actions but no control over others? Is a different HPID needed for each SHP? It does appear that there can be some flexibility allowed under the regulation, i.e., a CHP can have one or multiple HPIDs for employer sponsored plans with SHPs. Because these questions require an interpretation of the regulations, we suggest that a health plan obtain legal advice if there is any concern as to the number of HPIDs that should be obtained.

HHS has provided frequently asked questions (FAQs) to address some of the issues that arise with respect to obtaining an HPID.

The FAQs make it clear that for insured plans, the insurance company must obtain the HPID. The FAQs also make it clear that HSAs, FSAs, and HRAs that cover deductibles only or out-of-pocket costs are not plans that need an HPID. Other HRAs may need an HPID. Dental plans will need to obtain an HPID if they are the only self-insured plan according to the FAQs.

In order to obtain an HPID, a plan's authorized representative must first register on the Health Insurance Oversight System (HIOS). See the quick reference guide and user manual. A third party administrator can obtain the HPID if authorized to do so by the self-insured Health Plan.

The Centers for Medicare and Medicaid Services (CMS) did update their HPID portal in late September so that a single employer could have multiple HPIDs and so that National Association of Insurance Commissioners (NAIC) numbers are no longer required. These fixes should help many CHPs.

Cheiron health consultants can assist you with understanding this requirement.

Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are neither attorneys nor accountants. Therefore, we do not provide legal services or tax advice.

1 The delay in the required implementation was to provide time for health plans to communicate the new identifier and to modify their systems to use the HPID.