How Medical Claims Simplification Can Impede Delivery of Child Developmental Services

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) seeks to achieve greater efficiency and effectiveness in the health care system by requiring payers and providers to use standardized procedure codes for payment claims. HIPAA has a significant impact on the translation of benefit designs into medical claims payment standards. This presents challenges for children with Medicaid coverage, since the Medicaid program employs a unique definition of medical necessity that ties coverage to childhood growth and development. To comply with HIPAA, state Medicaid agencies must eliminate local payment codes, a process that may result in reduced levels of coverage for children, particularly for primary health and support services such as mental health services, early intervention, physical and speech therapy, home care, case management, and transportation. To avoid unintentional reduction of child development services, the authors suggest revising HIPAA to allow states to customize payment coding to their unique coverage standards. Support for this research was provided by The Commonwealth Fund. The views presented here are those of the authors and not necessarily those of The Commonwealth Fund or its directors, officers, or staff. Additional copies of this and other Commonwealth Fund publications are available online at www.cmwf.org. To learn more about new Fund publications when they appear, visit the Fund’s Web site and register to receive e-mail alerts. Commonwealth Fund pub. no. 851.