When people think of a private health insurance exchange, they generally think of the marketplace itself, but there’s a lot of work that goes into the backend, including enrollment files, member maintenance files, billing data, plan data, and rating data. We’ve been managing and maintaining integrations with carriers’ enterprise systems since 2006, but in this blog post we’ll focus on one of the most notorious file formats for enrollment and why it’s here to stay. In a future post we’ll discuss how we’re moving towards a universal standard for enrollment.

In our industry the standard way to exchange enrollment data is via an ASC X12 benefit enrollment and maintenance file or “834 file.” As any integration developer will tell you, it’s cumbersome to work with and it’s frustrating that every insurer has their own variant or configuration of the 834 standard.

So why do we keep using it when there are other, more common data exchange protocols such as XML?

The genesis for the various x12 transaction sets (including 834) came in 1991 when the Workgroup for Electronic Data Interchange (WEDI) was formed by the Secretary of Health and Human Services (HHS), Louis Sullivan. The following year, WEDI produced a report calling for the insurance industry to adopt EDI standards set by the American National Standards Institute (ANSI). A recommendation is not a law, but with some machinations through the “Hillarycare” proposals the surviving recommendations were weaved into the Health Information Portability and Accountability Act (HIPAA) which passed in 1996.

HIPAA required that the HHS Secretary “adopt standards for transactions, and data elements for such transactions” and even specifically listed WEDI as one of the organizations that would be consulted on the formation of the standards. After the rulemaking process and four years later, HHS released the final standards for electronic transactions in 2000 which generally requires insurers to use the standards to exchange data between other Covered Entities or the Business Associates of Covered Entities.

Long story short, HIPAA requires carriers to use the 834 transaction set with their Covered Entity trading partners and this has flowed down to most of the other third parties that interface with insurers. It’s also the backbone of the enrollment and maintenance transactions between insurers and State and Federal exchanges.

Literally, it would take an act of Congress to dramatically change either the 834 format or introduce a new standard. Since Congress has many other priorities and any regulation would require re-configuring all of the state and federal exchanges, 834 is here to stay for a very long time.

Stay tuned for our next post on how leveraging the Federally Facilitated Exchanges’ 834 format (and companion guide) can allow insurers and their EDI trading partners to go to market with integrations faster and at a lower cost than what the industry is doing today. The 834 is also central to any effort by insurers to eliminate paper-based enrollment processing to reduce costs.

Thanks to my colleague Kyle Henderson for helping with this post.

42 USC 1320d-1 and 1320d-2