The Department of Health and Human Services (“HHS”) recently released guidance on the application process to obtain a Health Plan Identifier (“HPID”). A HPID is an all-numeric 10-digit identification number that many HIPAA-covered health plans are required to adopt by November 5, 2014. Think of a HPID like an EIN for health plans. HPIDs will be used in all HIPAA standard transactions, such as the payment of health care claims, claim status checks, health plan eligibility confirmations, and premium payments.

The HPID requirement is another product of the Affordable Care Act and seeks to reduce administrative costs by promoting electronic transactions between medical providers and health plans. To acquire HPIDs for their health plans, plan sponsors will have to register with the Centers for Medicare and Medicaid Services’ (“CMS”) Health Plan and Other Entity Enumeration System (“HPOES”) available through the CMS Enterprise Portal.

It is fair to say that prior to this new guidance the instructions for the application process were not exactly easy to follow. This new two-page document, however, navigates users through the HPID application process step-by-step. In essence, employers will register their organization, identify approved users in the web portal and their roles, and designate an “Authorizing Official User” to act on behalf of the organization in approving/submitting applications.

HPIDs are not required for every health plan, only Controlling Health Plans (“CHP”). A CHP is a health plan that either controls its own business activities or is not controlled by an entity that is not a health plan and exercises sufficient control over any Subhealth Plans (“SHP”). A SHP is simply a health plan whose business activities are controlled by a CHP and obtaining a HPID for SHPs is optional.

Making the HPID optional for SHPs recognizes that employers can structure their health plans in a variety of different ways. For instance, a welfare benefit plan that has three medical benefit arrangements is only required to obtain a single HPID for the welfare benefit plan. The employer could, however, assign separate HPIDs to each medical arrangement if it would simplify claims administration, or any other reason. For most entities, coordination with the third-party claims administrator will determine whether obtaining a SHP has any benefit.

HPIDs will be required to be used in HIPAA standard transactions beginning November 7, 2016. It is the obligation of the HIPAA covered entity to use an HPID in the electronic HIPAA transactions and ensure that business associates of the entity are also using a HPID.