On October 1, 2013, the ICD-9 code sets used to report medical diagnoses and inpatient procedures will be replaced

by ICD-10 code sets. To accommodate the ICD-10 code structure, the transaction standards used for electronic health care claims, Version 4010/4010A, must be upgraded to Version 5010 by January 1, 2012. This fact sheet provides background on the ICD10 transition, general guidance on how to prepare for it, and resources for more information. About ICD-10 ICD-10-CM/PCS (International Classification of Diseases, 10th Edition, Clinical Modification/Procedure Coding System) consists of two parts: 1. ICD-10-CM for diagnosis coding 2. ICD-10-PCS for inpatient procedure coding ICD-10-CM is for use in all U.S. health care settings. Diagnosis coding under ICD-10-CM uses 3 to 7 digits instead of the 3 to 5 digits used with ICD-9-CM, but the format of the code sets is similar. ICD-10-PCS is for use in U.S. inpatient hospital settings only. ICD-10-PCS uses 7 alphanumeric digits instead of the 3 or 4 numeric digits used under ICD-9-CM procedure coding. Coding under ICD-10-PCS is much more specific and substantially different from ICD-9-CM procedure coding. The transition to ICD-10 is occurring because ICD-9 produces limited data about patients medical conditions and hospital inpatient procedures. ICD-9 is 30 years old, has outdated terms, and is inconsistent with current medical practice. Also, the structure of ICD-9 limits the number of new codes that can be created, and many ICD-9 categories are full. Who Needs to Transition ICD-10 will affect diagnosis and inpatient procedure coding for everyone covered by the Health Insurance Portability and Accountability Act (HIPAA), not just those who submit Medicare or Medicaid claims. Everyone covered by HIPAA who transmits electronic claims must also switch to Version 5010 transaction standards. The change to ICD-10 does not affect CPT coding for outpatient procedures. Health care providers, payers, clearinghouses, and billing services must be prepared to comply with the Version 5010 and ICD-10 transitions H ealth care providers, payers, billing services, clearinghouses, and other organizations that conduct electronic transactions should complete internal testing of Version 5010 systems in time to begin external testing with each other by January 1, 2011. All electronic claims submitted on or after January 1, 2012, must use Version 5010 transaction standards. Electronic claims that do not use Version 5010 standards cannot be paid. I CD-10 diagnosis codes must be used for all health care services provided in the U.S. on or after October 1, 2013. ICD-10 procedure codes must be used for all hospital inpatient procedures performed on or after October 1, 2013. Claims with ICD-9 codes for services provided on or after October 1, 2013, cannot be paid. Preparing for the Transition It is important to prepare now for the ICD-10 and Version 5010 transition. The following are steps you can take to get started: P roviders Develop an implementation strategy that includes an assessment of the impact on your organization, a detailed timeline, and budget. Check with your billing service, clearinghouse, or practice management software vendor about their compliance plans. Providers

who handle billing and software development internally should plan for medical records/coding, clinical, IT, and finance staff to coordinate on ICD-10 and Version 5010 transition efforts. P ayers Review payment policies since the transition to ICD-10 will involve new coding rules. Ask your software vendors about their readiness plans and timelines for product development, testing, availability, and training for Version 5010 and ICD-10. You should have an implementation plan and transition budget in place. Software vendors, clearinghouses, and third-party billing services You should have products and services in development that will allow payers and providers to fully implement Version 5010 on January 1, 2012, and ICD-10 on October 1, 2013. Begin talking to your customers now about preparing for the transition. Your products and services will be obsolete if you do not take steps now to get ready. ICD-10 and Version 5010 Resources There are many professional, clinical, and trade associations offering a wide variety of Version 5010 and ICD-10 information, educational resources, and checklists. Call or check the Web sites of your associations and other industry groups to see what resources are available. The Centers for Medicare & Medicaid Services (CMS) Web site www.cms.gov/ICD10 has official CMS resources to help you prepare for Version 5010 and ICD-10. CMS will continue to add new tools and information to the site throughout the course of the transition, so check the site frequently for updated resources. This fact sheet was prepared as a service to the health care industry and is not intended to grant rights or impose obligations. The information provided is only intended to be a general summary. It is not intended to take the place of either the written law or regulations. We encourage readers to review the specific statutes, regulations, and other interpretive materials for a full and accurate statement of their contents. Official

The new classification system provides significant improvements through greater detailed information and the ability to expand in order to capture additional advancements in clinical medicine. ICD-10-CM/PCS consists of two parts: ICD-10-CM The diagnosis classification system developed by the Centers for Disease Control and Prevention for use in all U.S. health care treatment settings. Diagnosis coding under this system uses 37 alpha and numeric digits and full code titles, but the format is very much the same as ICD-9-CM; and ICD-10-PCS The procedure classification system developed by the Centers for Medicare & Medicaid Services (CMS) for use in the U.S. for inpatient hospital settings ONLY. The new procedure coding system uses 7 alpha or numeric digits while the ICD-9-CM coding system uses 3 or 4 numeric digits. The current system, International Classification of Diseases, 9th Edition, Clinical Modification (ICD-9-CM), does not provide the necessary detail for patients medical conditions or the procedures and services performed on hospitalized patients. ICD-9-CM is 30 years old, has outdated and obsolete terminology, uses outdated codes that produce inaccurate and limited data, and is inconsistent with current medical practice. It cannot accurately describe the diagnoses and inpatient procedures of care delivered in the 21st century.

ICD-10-CM/PCS: Incorporates much greater specificity and clinical information, which results in: n Improved ability to measure health care services; n Increased sensitivity when refining grouping and reimbursement methodologies; n Enhanced ability to conduct public health surveillance; and n Decreased need to include supporting documentation with claims; Includes updated medical terminology and classification of diseases; Provides codes to allow comparison of mortality and morbidity data; and Provides better data for: n Measuring care furnished to patients; n Designing payment systems; n Processing claims; n Making clinical decisions; n Tracking public health; n Identifying fraud and abuse; and n Conducting research. Below are examples that show where ICD-10-CM/PCS codes are more precise and provide better information.

The Administrative Simplification provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA, Title II) require the Department of Health and Human Services (HHS) to adopt national standards for electronic health care transactions and national identifiers for providers, health plans, and employers. To date, the implementation of HIPAA standards has increased the use of electronic data interchange. Provisions under the Affordable Care Act of 2010 will further these increases and include requirements to adopt: operating rules for each of the HIPAA covered transactions a unique, standard Health Plan Identifier (HPID) a standard and operating rules for electronic funds transfer (EFT) and electronic remittance advice (RA) and claims attachments. In addition, health plans will be required to certify their compliance. The Act provides for substantial penalties for failures to certify or comply with the new standards and operating rules.

For more information regarding HIPAA including additional provisions under the Patient Protections and Affordable Care Act (Affordable Care Act or ACA) of 2010, go to the "Related Links Outside CMS". Electronic data interchange (EDI) refers to the electronic transfer of information in a standard format between trading partners. When compared with paper submissions, EDI can substantially lessen the time and costs associated with receiving, processing, and storing documents. The use of EDI can also eliminate inefficiencies and streamline processing tasks, which can in turn result in less administrative burden, lower operating costs, and improved overall data quality. The health care industry recognizes the benefits of EDI, and many entities in the industry have developed proprietary EDI formats. However, with the increasing use of health care EDI standards, the lack of common, industry-wide standards has emerged as a major obstacle to realizing potential efficiency and savings. In the August 17, 2000 final rule, (the Transactions Rule), the Secretary adopted standards for eight electronic transactions and six code sets. The transactions are: Health Care Claims or Equivalent Encounter Information; Eligibility for a Health Plan; Referral Certification and Authorization; Health Care Claim Status; Enrollment and Disenrollment in a Health Plan; Health Care Payment and Remittance Advice; Health Plan Premium Payments; and Coordination of Benefits. The code sets are: International Classification of Diseases, 9th Edition, Clinical Modification, Volumes 1 and 2; International Classification of Diseases, 9th Edition, Clinical Modification, Volume 3 Procedures; National Drug Codes; CMS-0003/5-F Page 8

 Code on Dental Procedures and Nomenclature; Health Care Financing Administration Common Procedure Coding System; and Current Procedural Terminology, 4th Edition. This final rule adopts modifications to the August 17, 2000 transaction and code set standards. The International Classification of Diseases (ICD) is designed to promote international comparability in the collection, processing, classification, and presentation of mortality statistics. This includes providing a format for reporting causes of death on the death certificate. The reported conditions are then translated into medical codes through use of the classification structure and the selection and modification rules contained in the applicable revision of the ICD, published by the World Health Organization. These coding rules improve the usefulness of mortality statistics by giving preference to certain categories, by consolidating conditions, and by systematically selecting a single cause of death from a reported sequence of conditions. The single selected cause for tabulation is called the underlying cause of death, and the other reported causes are the nonunderlying causes of death. The combination of underlying and nonunderlying causes is the multiple causes of death. The ICD has been revised periodically to incorporate changes in the medical field. To date, there have been 10 revisions of the ICD. The years for which causes of death in the United States have been classified by each revision are as follows: Revision Years Covered 1st 2d 3d 4th 5th 6th 7th 8th 9th 1900-09 1910-20 1921-29 1930-38 1939-48 1949-57 1958-67 1968-78 1979-98

10th 1999-present The U.S. introduced its own classification and coding rules for Human immunodeficiency virus infection (HIV) mortality effective with the 1987 data year (see the Technical Appendix of Vital Statistics of the United States). The ICD-9 is no longer available in print. Volume I, modified for U.S. purposes, is available. In addition, the most detailed tabulation list of causes used in the U.S. can be found at the beginning of the mortality worktable GMWKI. A related classification, the International Classification of Diseases, Clinical Modification (ICD9-CM), is used in assigning codes to diagnoses associated with inpatient, outpatient, and

physician office utilization in the U.S. Volume 3 (procedures) is used in assigning codes associated with inpatient procedures. The ICD-9-CM is based on the ICD but provides for additional morbidity detail and is annually updated. The National Center for Health Statistics (NCHS), the Federal agency responsible for use of the International Statistical Classification of Diseases and Related Health Problems, 10th revision (ICD-10) in the United States, has developed a clinical modification of the classification for morbidity purposes. The ICD-10 is used to code and classify mortality data from death certificates, having replaced ICD-9 for this purpose as of January 1, 1999. ICD-10-CM is planned as the replacement for ICD-9-CM, volumes 1 and 2. The ICD-10 is copyrighted by the World Health Organization (WHO) , which owns and publishes the classification. WHO has authorized the development of an adaptation of ICD-10 for use in the United States for U.S. government purposes. As agreed, all modifications to the ICD-10 must conform to WHO conventions for the ICD. ICD-10-CM was developed following a thorough evaluation by a Technical Advisory Panel and extensive additional consultation with physician groups, clinical coders, and others to assure clinical accuracy and utility.

The clinical modification represents a significant improvement over ICD-9-CM and ICD-10. Specific improvements include: the addition of information relevant to ambulatory and managed care encounters; expanded injury codes; the creation of combination diagnosis/symptom codes to reduce the number of codes needed to fully describe a condition; the addition of sixth and seventh characters; incorporation of common 4th and 5th digit subclassifications; laterality; and greater specificity in code assignment. The new structure will allow further expansion than was possible with ICD-9-CM. On January 16, 2009 HHS published a final rule adopting ICD-10-CM (and ICD-10-PCS) to replace ICD-9-CM in HIPAA transactions, effective implementation date of October 1, 2013. Until that time the codes in ICD-10-CM are not valid for any purpose or use.

NCPDP CLAIM Page 1 of 3

NCPDP 5.1 NCPDP D.0 Claim Billing Based on External Code List of 07/2007 Transmission Header Segment Transmission Header Segment Valid values are spaces, 01 through 14, 99 Service Provider ID Qualifier (202-B2) value 15 added Transmission Insurance Segment Transmission Insurance Segment Facility ID is present Facility ID (336-8C) removed, moved to new Facility Segment Group ID currently used to identify claim-based Medicaid crossover claims Group ID (301-C1) functionality replaced by new Medicaid Indicator (360-2B)

Not available Medigap ID (359-2A) added Not available Medicaid Indicator (360-2B) added Not available Provider Accept Assignment Indicator (361-2D) added Not available CMS Part D Defined Qualified Facility (997-G2) added Not available Medicaid ID Number (115-N5) added Not available Medicaid Agency Number (116-N6) added This field is not allowed in Claim Billing, only in Medicaid Subrogation Claim Billing. Transmission Patient Segment Transmission Patient Segment Valid values are spaces, 01 through 03, 99 Patient ID Qualifier (331-CX) values 04, 05, 06 added Valid values are 01 through 11 Patient Location (307-C7) is renamed to Place of Service and now uses the standard CMS Place of Service values Smoker/Non-Smoker Code (334-1C) is present Smoker/Non-Smoker Code (334-1C) not allowed Not available Patient E-mail Address (350-HN) added Not available Patient Residence (384-4X) added Transaction Prescriber Segment Transaction Prescriber Segment Valid values are spaces, 01 through 14, 99 Prescriber ID Qualifier (466-EZ) value 15 added Prescriber Location Code is present Prescriber Location Code (467-1E) removed Valid values are spaces, 01 through 14, 99 Primary Care Provider ID Qualifier (468-2E) value 07 removed, 15 added Primary Care Location Code is present Primary Care Provider Location Code (469-H5) removed Not available Prescriber First Name (364-2J) added Not available Prescriber Street Address (365-2K) added Not available Prescriber City Address (366-2M) added Not available Prescriber State / Province Address (367-2N) added Not available Prescriber Zip/Postal Zone (368-2P) added Transaction COB/Other Payments Segment Transaction COB/Other Payments Segment Valid values are spaces, 01 through 03, 98, 99 Other Payer Coverage Type (338-5C) values 04 through 09 added, 98 and 99 removed Valid values are spaces, 01 through 04, 09, 99 Other Payer ID Qualifier (339-6C) value 05 added, value 09 removed Not available Internal Control Number (993-A7) added Valid values are spaces, 01 through 08, 98, 99 Other Payer Amount Paid Qualifier (342-HC) values 08, 98, 99 removed

NCPDP CLAIM Page 2 of 3

NCPDP 5.1 NCPDP D.0 Claim Billing Not available Other PayerPatient Responsibility Amount Paid Count (353-NR) added Not available Other Payer-Patient Responsibility Amount Paid Qualifier (351-NP) added Not available Other PayerPatient Responsibility Amount (352NQ) added Not available Benefit Stage Count (392-MU) added Not available Benefit Stage Qualifier (393-MV) added

Not available Benefit Stage Amount (394-MW) added Transaction Workers Compensation Segment Transaction Workers Compensation Segment Not available Billing Entity Type Indicator (117-TR) added Not available Pay To Qualifier (118-TS) added Not available Pay To ID (119-TT) added Not available Pay To Name (120-TU) added Not available Pay To Street Address (121-TV) added Not available Pay To City Address (122-TW) added Not available Pay To State / Province Address (123-TX) added Not available Pay To Zip/Postal Zone (124-TY) added Not available Generic Equivalent Product ID Qualifier (125-TZ) added Not available Generic Equivalent Product ID (126-UA) added Transaction Claim Segment Transaction Claim Segment Prescription / Service Reference Number format is 9(07) Prescription / Service Reference Number (402-D2) format is 9(12) Valid values are spaces, 01 through 13, 99 Product / Service ID Qualifier (436-E1) value 05 and 13 removed, values 15, 27 through 34 added Associated Prescription / Service Reference Number format is 9(07) Associated Prescription / Service Reference Number (456-EN) format is 9(12) Not available Submission Clarification Code Count (354-NX) added Valid values are 00 through 09, 99 Submission Clarification Code (420-DK) values 11 through 19 added Quantity Prescribed is present Quantity Prescribed (460-ET) not allowed Valid values are 00 through 08 Other Coverage Code (308-C8) values 05, 06, 07 are not valid Valid values are 0 through 3 Unit Dose Indicator renamed to Special Packaging Indicator (429-DT) values 4 and 5 added Alternate ID is present Alternate ID (330-CW) not allowed, but inbound functionality will be addressed by the new Medigap ID (359-2A) in Insurance Segment, and outbound by the new Internal Control Number (993-A7) in the COB/Other Payments Segment Scheduled Prescription ID Number is present Scheduled Prescription ID Number (454-EK) not allowed Valid values are 00 through 08 Prior Authorization Type Code (461-EU) value 09 added Not available Delay Reason Code (357-NV) added Not available Patient Assignment Indicator (391-MT) added Not available Route of Administration (995-E2) added Not available Compound Type (996-G1) added Not available Pharmacy Service Type (147-U7) added

NCPDP CLAIM Page 3 of 3

NCPDP 5.1 NCPDP D.0 Claim Billing

Transaction Compound Segment Transaction Compound Segment Compound Route of Administration is present Compound Route of Administration (452-EH) removed and replaced by Route of Administration (995-E2) in the Claim Segment Valid values are spaces, 01 through 07, 09 Compound Ingredient Basis of Cost Determination (490-UE) values 08, 10 through 12 added (Uses same values as Basis Of Cost Determination (423-DN)) Not available Compound Ingredient Modifier Code Count (3622G) added Not available Compound Ingredient Modifier Code (363-2H) added Transaction Pricing Segment Transaction Pricing Segment Professional Service Fee Submitted is present Professional Service Fee Submitted (447-BE) not allowed Transaction Prior Authorization Segment Transaction Prior Authorization Segment Prior Authorization Segment fields are present Segment no longer valid for the Billing Transaction. See pages 45-59 in the NCPDP 5.1 to D0 Comparison Document for the fields in other segments that will replace the functionality of the fields in this segment. Transaction Clinical Segment Transaction Clinical Segment Valid values are spaces, 00 through 07, 99 Diagnosis Code Qualifier (492-WE) values 08 and 09 added Valid values are spaces, 00 through 17, 99 Measurement Dimension (496-H2) values 18 through 34 added Valid values are spaces, 00 through 18 Measurement Unit (497-H3) values 19 through 27 added Transaction Additional Documentation Segment Not available This is a new situational segment Transaction Facility Segment Not available This is a new situational segment Transaction Narrative Segment Not available This is a new situational segment

This section contains information on: 1. Our Electronic Data Interchange (EDI) transaction and corresponding paper claims requirements; 2. Links to those Chapters of the Medicare Claims Processing Manual (pub.100-04) that contain further information on these types of transactions; 3. Our Health Insurance Portability and Accountability Act (HIPAA) contingency plans; 4. The Administrative Simplification Compliance Act (ASCA) requirement that claims be sent to Medicare electronically as a condition for payment; 5. How you can obtain access to Medicare systems to submit or receive claim or beneficiary eligibility data electronically; and 6. EDI support furnished by Medicare contractors. The information in this section is intended for the use of health care providers,

clearinghouses and billing services that submit transactions to or receive transactions from Medicare fee-for-service contractors. EDI is the automated transfer of data in a specific format following specific data content rules between a health care provider and Medicare, or between Medicare and another health care plan. In some cases, that transfer may take place with the assistance of a clearinghouse or billing service that represents a provider of health care or another payer. EDI transactions are transferred via computer either to or from Medicare. Through use of EDI, both Medicare and health care providers can process transactions faster and at a lower cost.

The HIPAA/EDI provision was scheduled to take effect from October 16, 2003 with a one-year extension for certain "small plans". However, due to widespread confusion and difficulty in implementing the rule, CMS granted a one-year extension to all parties.[citation needed] On January 1, 2012 the newest version 5010 becomes effective, replacing the version 4010.[28] This allows for the larger field size of ICD-10-CM as well as other improvements. After July 1, 2005 most medical providers that file electronically did have to file their electronic claims using the HIPAA standards in order to be paid.[citation needed] Key EDI(X12) transactions used for HIPAA compliance are: EDI Health Care Claim Transaction set (837) is used to submit health care claim billing information, encounter information, or both, except for retail pharmacy claims (see EDI Retail Pharmacy Claim Transaction). It can be sent from providers of health care services to payers, either directly or via intermediary billers and claims clearinghouses. It can also be used to transmit health care claims and billing payment information between payers with different payment responsibilities where coordination of benefits is required or between payers and regulatory agencies to monitor the rendering, billing, and/or payment of health care services within a specific health care/insurance industry segment. For example, a state mental health agency may mandate all healthcare claims, Providers and health plans who trade professional (medical) health care claims electronically must use the 837 Health Care Claim: Professional standard to send in claims. As there are many different business applications for the Health Care claim, there can be slight derivations to cover off claims involving unique claims such as for Institutions, Professionals, Chiropractors, and Dentists etc. EDI Retail Pharmacy Claim Transaction (NCPDP Telecommunications Standard version 5.1) is used to submit retail pharmacy claims to payers by health care professionals who dispense medications, either directly or via intermediary billers and claims clearinghouses. It can also be used to transmit claims for retail pharmacy services and billing payment information between payers with different payment responsibilities where coordination of benefits is required or between payers and regulatory agencies to monitor the rendering, billing, and/or payment of retail pharmacy services within the pharmacy health care/insurance industry segment. EDI Health Care Claim Payment/Advice Transaction Set (835) can be used to make a payment, send an Explanation of Benefits (EOB), send an Explanation of Payments (EOP) remittance advice, or make a payment and send an EOP remittance advice only from a health insurer to a health care provider either directly or via a financial institution. EDI Benefit Enrollment and Maintenance Set (834) can be used by employers, unions, government agencies, associations or insurance agencies to enroll members to a payer. The payer

is a healthcare organization that pays claims, administers insurance or benefit or product. Examples of payers include an insurance company, health care professional (HMO), preferred provider organization (PPO), government agency (Medicaid, Medicare etc.) or any organization that may be contracted by one of these former groups. EDI Payroll Deducted and other group Premium Payment for Insurance Products (820) is a transaction set which can be used to make a premium payment for insurance products. It can be used to order a financial institution to make a payment to a payee. EDI Health Care Eligibility/Benefit Inquiry (270) is used to inquire about the health care benefits and eligibility associated with a subscriber or dependent. EDI Health Care Eligibility/Benefit Response (271) is used to respond to a request inquire about the health care benefits and eligibility associated with a subscriber or dependent. EDI Health Care Claim Status Request (276) This transaction set can be used by a provider, recipient of health care products or services or their authorized agent to request the status of a health care claim. EDI Health Care Claim Status Notification (277) This transaction set can be used by a health care payer or authorized agent to notify a provider, recipient or authorized agent regarding the status of a health care claim or encounter, or to request additional information from the provider regarding a health care claim or encounter. This transaction set is not intended to replace the Health Care Claim Payment/Advice Transaction Set (835) and therefore, is not used for account payment posting. The notification is at a summary or service line detail level. The notification may be solicited or unsolicited. EDI Health Care Service Review Information (278) This transaction set can be used to transmit health care service information, such as subscriber, patient, demographic, diagnosis or treatment data for the purpose of request for review, certification, notification or reporting the outcome of a health care services review. EDI Functional Acknowledgement Transaction Set (997) this transaction set can be used to define the control structures for a set of acknowledgments to indicate the results of the syntactical analysis of the electronically encoded documents. Although it is not specifically named in the HIPAA Legislation or Final Rule, it is necessary for X12 transaction set processing . The encoded documents are the transaction sets, which are grouped in functional groups, used in defining transactions for business data interchange. This standard does not cover the semantic meaning of the information encoded in the transaction sets.

Title I: Health Care Access, Portability, and Renewability

Title I of HIPAA regulates the availability and breadth of group health plans and certain individual health insurance policies. It amended the Employee Retirement Income Security Act, the Public Health Service Act, and the Internal Revenue Code. Title I also limits restrictions that a group health plan can place on benefits for preexisting conditions. Group health plans may refuse to provide benefits relating to preexisting conditions for a period of 12 months after enrollment in the plan or 18 months in the case of late enrollment. [2] However, individuals may reduce this exclusion period if they had group health plan coverage or health insurance prior to enrolling in the plan. Title I allows individuals to reduce the exclusion period by the amount of time that they had "creditable coverage" prior to enrolling in the plan and after any "significant breaks" in coverage.[3] "Creditable coverage" is defined quite broadly and includes nearly all group and individual health plans, Medicare, and Medicaid.[4] A

"significant break" in coverage is defined as any 63 day period without any creditable coverage.
[5]

Title II: Preventing Health Care Fraud and Abuse; Administrative Simplification; Medical Liability Reform
This section needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (April 2010) Title II of HIPAA defines numerous offenses relating to health care and sets civil and criminal penalties for them. It also creates several programs to control fraud and abuse within the health care system.[6][7][8] However, the most significant provisions of Title II are its Administrative Simplification rules. Title II requires the Department of Health and Human Services (HHS) to draft rules aimed at increasing the efficiency of the health care system by creating standards for the use and dissemination of health care information. These rules apply to "covered entities" as defined by HIPAA and the HHS. Covered entities include health plans, health care clearinghouses, such as billing services and community health information systems, and health care providers that transmit health care data in a way that is regulated by HIPAA.[9][10] Per the requirements of Title II, the HHS has promulgated five rules regarding Administrative Simplification: the Privacy Rule, the Transactions and Code Sets Rule, the Security Rule, the Unique Identifiers Rule, and the Enforcement Rule.

The Medicaid program, enacted in 1965 under Title XIX of the Social Security Act (the Act) is a grant in aid Medical Assistance Program financed through joint Federal and state funding and administered by each state according to an approved state plan. Under this plan, a state reimburses providers of medical assistance to individuals found eligible under Title XIX and various other titles of the Act. For Medicaid purposes, the mechanized claims processing and information retrieval system which states are required to have, unless this requirement is waived by the Secretary, is the Medicaid Management Information System (MMIS). The MMIS is an integrated group of procedures and computer processing operations (subsystems) developed at the general design level to meet principal objectives. For Title XIX purposes, "systems mechanization" and "mechanized claims processing and information retrieval systems" is identified in section 1903(a)(3) of the Act and defined in

regulation at 42 CFR 433.111. The objectives of this system and its enhancements include the Title XIX program control and administrative costs; service to recipients, providers and inquiries; operations of claims control and computer capabilities; and management reporting for planning and control. Contractual services may be utilized to perform work for the design, development, installation, or enhancement of a mechanized claims processing and information retrieval system. A fiscal agent who is a private contractor to the state, normally selected through a competitive procurement process, may operate the state's MMIS. A state MMIS fiscal agent contract status report is prepared quarterly from CMS central office following the input from regional offices