Standard Unique Employer Identifier

IV. Provisions of Final Rule

We are implementing the employer identifier standard, which we now refer to as the standard unique employer identifier, as we proposed in the proposed rule, incorporating minor revisions. Any revisions are noted in Section VI (Summary of Changes to the Proposed Rule).

V. Implementation of the Standard Unique Employer Identifier

A. Obtaining an EIN

The Internal Revenue Service (IRS) maintains the process for assigning EINs. A business can obtain an EIN by submitting, to the Internal Revenue Service, Internal Revenue Service Form SS-4, Application for Employer Identification Number. Any business that is required to furnish a taxpayer identification number (generally one that pays wages to one or more employees) must use an EIN as its taxpayer identifying number. (26 CFR 301.6109-1(a)(1)(ii)(C)). A sole proprietor who has no employees or who files no excise or pension tax returns is the only business person who does not need to have an EIN as the taxpayer identifying number. We know of no situations where an employer having employees would not be able to obtain an EIN. The EIN is currently the employer identifier in most widespread use in the enrollment and disenrollment in a health plan, the eligibility for a health plan, and the health plan premium payment transactions. Employers are not required by the Act to use the EIN or conduct standard transactions. However, we believe that many employers will find that it will be to their advantage to do so.

B. Approved Uses

The IRS, in a letter to us dated January 16, 1998, stated that "the use of the EIN as a unique identifying number in all health care transactions would not present a problem for the (Internal Revenue) Service in any way." The IRS further expressed the "hope that the use of the EIN in this capacity will bring about the consistency and accuracy that are required for these types of transactions." Two years after adoption of this standard (3 years for small health plans) covered entities must use the EIN as the employer identifier in the health-related financial and administrative transactions for which standards have been adopted by the Secretary under 45 CFR Subchapter C that require an employer identifier. We note that employers that are not health plans, health care clearinghouses, or health care providers are not bound by the Act, and use of the EIN by employers to identify themselves in the employer role is voluntary.

Examples of approved uses in standard health care transactions are the following:

Employers could use their EINs to identify themselves in transactions making health plan premium payments to health plans on behalf of their employees.

Employers could use the EIN to identify themselves or other employers as the source or receiver of information about eligibility.

Employers could use their EINs to identify themselves in transactions to enroll or disenroll their employees in a health plan.

VI. Summary of Changes to the Proposed Rule

• We changed the title of this regulation from National Standard Employer Identifier to Standard Unique Employer Identifier to accurately reflect the requirement under the Act for the Secretary to adopt a standard unique health identifier for each employer for use in the health care system.
• We deleted the formatting description from the definition of EIN. We continue to define EIN as the employer identification number as assigned by the IRS.
• We clarified that our definition of employer is as it appears in 26 U.S.C. 3401(d).
• We removed the requirement for each employer to disclose its EIN, upon request, to covered entities that need to use that employer's EIN in standard transactions.
• We consolidated the requirements for health care providers, health plans, and health care clearinghouses in Sec. 162.610.

VII. Collection of Information Requirements

Under the Paperwork Reduction Act of 1995 (PRA), agencies are required to provide a 30-day notice in the Federal Register and solicit public comment on a collection of information requirement submitted to the Office of Management and Budget (OMB) for review and approval. In order to fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the PRA requires that we solicit comment on the following issues:

• Whether the information collection is necessary and useful to carry out the proper functions of the agency.
• The accuracy of the agency's estimate of the information collection burden.
• The quality, utility, and clarity of the information to be collected.
• Recommendations to minimize the information collection burden on the affected public, including automated collection techniques.

We are soliciting public comment on each of these issues for the following section of this document that contains information collection requirements.

Subpart F--Standard Unique Employer Identifier

Sec. 162.610 Requirements for covered entities

Discussion
While this standard would replace the use of multiple identifiers, resulting in a reduction of burden, the requirement to use and disclose information using this standard meets the definition of an agency-sponsored third-party disclosure under the Paperwork Reduction Act of 1995 (PRA). However, the burden associated with the routine or ongoing use of this requirement is excluded under the definition of "burden" at 5 CFR 1320.3(b)(2). Health care clearinghouses do not normally obtain or use the EIN except to reformat it as part of translating one transaction format to another. Adoption of the EIN does not require any changes to the way health care clearinghouses process employer identifiers. Thus, the cost of this regulation for health care clearinghouses is negligible.

As explained earlier in this document in section III. Comments and Responses Concerning the Proposed Provisions, health care providers do not conduct the only standard transaction in which the employer identifier is a required data element. In standard transactions that include the employer identifier and which may be conducted by a health care provider, the employer identifier use is situational. In such transactions, if the employer identifier is not known by the health care provider, the health care provider does not have to furnish it. The cost of this regulation for health care providers, therefore, is negligible.

The remaining burden associated with this requirement, which is subject to the PRA, is the initial one-time burden on health plans and covered health care providers to modify their current computer systems.

In most cases where a health plan would need to use an employer identifier, the health plan would have received the identifier on an incoming transaction from the employer. We estimate the one-time burden over a 3-year period on the estimated 2.55 million health plans to modify their current computer systems software would be 2 hours/$60 per entity, for a total burden of 5.1 million hours/$153 million. The maximum annual burden would be 5.1 million hours divided by 3, or 1.7 million hours, and $153 million divided by 3, or $51 million. These figures are based on the assumption that this and the other burden calculations associated with HIPAA, Title II systems modifications, may overlap. This average also takes into consideration that: (1) this
standard may already be in use by several of the estimated entities; (2) modifications may be performed in an aggregate manner during the course of routine business and/or; (3) modifications may be made by contractors such as practice management vendors, in a single effort for a multitude of affected entities.

As required by section 3504(h) of the Paperwork Reduction Act of 1995, we have submitted a copy of this document to the Office of Management and Budget (OMB) for its review of these information collection requirements.

Centers for Medicare & Medicaid Services,
Office of Information Services, DCES, SSG,
Attn: John Burke, Room N2-14-26,
7500 Security Boulevard,
Baltimore, MD 21244-1850;

ATTN: CMS 0047-F

and

Office of Information and Regulatory Affairs,
Office of Management and Budget, Room 10235,
New Executive Office Building,
Washington, DC 20503,
Attn: Brenda Aguilar, CMS Desk Officer