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Standards for Electronic Transactions and Code Sets

VII. Federalism

Executive Order 13132 of August 4, 1999, Federalism, published in the Federal Register on August 10, 1999 (64 FR 43255) requires us to ensure meaningful and timely input by State and local officials in the development of rules that have Federalism implications. Although the proposed rule (63 FR 25272) was published before the enactment of this Executive Order, the Department consulted with State and local officials as part of an outreach program early in the process of developing the proposed regulation. The Department received comments on the proposed rule from State agencies and from entities who conduct transactions with State agencies. Many of the comments referred to the costs incurred by State and local governments which will result from implementation of the HIPAA standards. We assume that government entities will have these costs offset by future savings, consistent with our projections for the private sector. A Congressional Budget Office analysis made the following points: States are already in the forefront of administering the Medicaid program electronically, Medicaid State agencies can compensate (for these costs) by reducing other expenditures, and the Federal government pays a portion of the cost of converting State Medicaid Management Information Systems.

Other comments regarding States expressed the need for clarification as to when State agencies were subject to the standards. Responses to comments from States and State organizations regarding the standard transactions set forth in this rule are found in this preamble.

In complying with the requirements of part C of title XI, the Secretary established interdepartmental implementation teams who consulted with appropriate State and Federal agencies and private organizations. These external groups consisted of the NCVHS Subcommittee on Standards and Security, the Workgroup for Electronic Data Interchange (WEDI), the National Uniform Claim Committee (NUCC), the National Uniform Billing Committee (NUBC) and the American Dental Association (ADA). The teams also received comments on the proposed regulation from a variety of organizations, including State Medicaid agencies and other Federal agencies.

VIII. Interaction with Privacy

The Secretary has developed this rule in conjunction with the development of standards to protect the privacy of individually identifiable health information, including information that will be transmitted pursuant to these transaction standards. Compliance with the privacy standards will be required at approximately the same time as the compliance dates of this rule. If the privacy standards are substantially delayed, or if Congress fails to adopt comprehensive and effective privacy standards that supercede the standards we are developing, we would seriously consider suspending the application of the transaction standards or taking action to withdraw this rule.


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[1] The SBA size standard for computer software related industries (SIC 7371-7379) is $18.0 million or less. Between 81% and 99% of the companies in these categories qualify.


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