Standard Unique Employer Identifier

II. Provisions of the Proposed Regulations

On June 16, 1998 (63 FR 32784), we proposed a national standard employer identifier and requirements concerning its implementation. That rule would have established requirements that health plans, health care clearinghouses, and health care providers would have to meet to comply with the requirements for use of a unique employer identifier in electronic transactions.

We proposed to add a new part to title 45 of the Code of Federal Regulations (63 FR 32784) for health plans, health care providers, and health care clearinghouses in general. The new part would have been part 142 of title 45 and would have been titled Administrative Requirements. Subpart F would have contained provisions specific to the employer identifier. In this final rule, we have codified these provisions in Part 162.

The proposed rule for the employer identifier (63 FR 32784) discussed applicability of HIPAA to all health plans, all health care clearinghouses, and those health care providers that transmit any health information in electronic form in connection with transactions referred to in section 1173(a)(1) of the Act.

The Transactions Rule (65 FR 50312) contains general requirements for administrative simplification, including applicability of the regulations, general effective dates, and definitions. We refer the reader to that rule for the discussion of comments and responses and for the actual regulations that were codified in the Code of Federal Regulations for the general requirements (45 CFR part 160 Subpart A, and 45 CFR part 162 Subparts A and I). In addition, some provisions in part 160 were further revised by the Privacy Rule published on December 28, 2000 (65 FR 82462).

A. Definitions

We proposed to define "employer" as 26 U.S.C. 3401(d) does: a person (or an entity) for whom an individual performs or performed any service, of any nature, as the employee of that person (or that entity) except for the following:

(1) If the entity for whom the individual performs or performed the services does not have control of the payment of the wages for the services, the term "employer" means the entity having control of the payment of the wages.

(2) If the entity pays wages on behalf of a nonresident alien individual, foreign partnership, or foreign corporation, not engaged in trade or business within the United States, the term "employer" means that entity.

We did not receive any comments on our definition of "employer." We note here that our proposed definition incorrectly omitted a reference to 26 U.S.C. 3401(a) of the Internal Revenue Code that is part of the definition at 26 U.S.C. 3401(d) of the Internal Revenue Code. We clarify in this rule that our definition of "employer" is as it appears in 26 U.S.C. 3401(d). We also note that the use of the term "individual" in the definition at 26 U.S.C. 3401(d) is not the same as in the final Privacy Rule. In the Privacy Rule, the word "individual" means a person who is the subject of protected health information. In the definition of employer, the word "individual" means a person who is an employee.

The EIN is defined in 26 CFR 301.7701-12. We proposed to define "Employer identification number" (EIN) as 26 CFR 301.7701-12 does:

"the taxpayer identifying number of an individual or other person (whether or not an employer) which is assigned pursuant to 26 U.S.C. 6011(b) or corresponding provisions of prior law, or pursuant to 26 U.S.C. 6109, and in which nine digits are separated by a hyphen, as follows: 00-0000000."

In this final rule, we deleted the formatting description from our definition of EIN. We continue to define EIN as the employer identification number, as assigned by the IRS.

Deletion of the formatting description from our regulatory definition gives us flexibility, in case the IRS should decide in the future to change the format of the EIN.

B. Employer Identifier Standard

We proposed that Sec. 142.602, National employer identifier standard, would describe the employer identifier standard. There currently exists no standard for employer identification that has been developed, adopted, or modified by a standard setting organization after consultation with the National Uniform Billing Committee (NUBC), the National Uniform Claim Committee (NUCC), the Workgroup for Electronic Data Interchange (WEDI), and the American Dental Association (ADA). Therefore, we would designate a new standard.

We proposed as the standard the employer identification number (EIN), which is assigned by the Internal Revenue Service (IRS), Department of the Treasury. As stated in II. Provisions of the Proposed Regulations, A. Definitions, we define EIN as the employer identification number assigned by the IRS, and we delete the formatting description in our definition.

Proposed Sec. 142.602 has become Sec. 162.605.

C. Requirements

In the proposed rule (63 FR 32787), we noted that the Act does not bind employers to use the standard. However, covered health care providers, health plans, and health care clearinghouses are bound to use the standard, where required, in electronic health transactions.

1. Health plans.

In Sec. 142.604, Requirements: Health plans, we proposed to require health plans to accept the EIN on all standard transactions and transmit the EIN on all standard transactions that require an employer identifier to identify a person or entity as an employer.

2. Health care clearinghouses.

We proposed to require in Sec. 142.606, Requirements: Health care clearinghouses, that each health care clearinghouse use the EIN on all standard transactions that require an employer identifier to identify a person or entity as an employer.

3. Health care providers.

In Sec. 142.608, Requirements: Health care providers, we proposed to require each health care provider to use the EIN, wherever required, on all standard transactions that require an employer identifier to identify a person or entity as an employer.

4. Employers.

In Sec. 142.610, Requirements: Employers, we proposed to require each employer to disclose its EIN, when requested, to any entity that conducts standard electronic transactions that require that employer's identifier to identify a person or entity as an employer.

Proposed Secs. 142.604, 142.606, and 142.608 have been consolidated into Sec. 162.610, and proposed Sec. 142.610 has been removed in this final rule.

D. Effective Dates and Compliance Dates of the Employer Identifier

We proposed that health plans would be required to comply with our requirements as follows:

Each health plan that is not a small health plan would have to comply with the requirements of Sec. 142.604, now consolidated into Sec. 162.610, no later than 24 months after the effective date of the final rule. (Note, proposed Sec. 142.104, General requirements for health plans, is addressed in the final Transactions Rule (65 FR 50369).)

Each small health plan would have to comply with the requirements of Sec. 142.604, now consolidated into Sec. 162.610, no later than 36 months after the effective date of the final rule. (Note, proposed Sec. 142.104, General requirements for health plans, is addressed in the final Transactions Rule (65 FR 50369).)

If the Secretary adopts a modification to a standard or implementation specification, the implementation date of the modification would be no earlier than the 180th day following the adoption of the modification. The Secretary would determine the actual date, taking into account the time needed to comply due to the nature and extent of the modification. The Secretary would be able to extend the time for compliance for small health plans.

We proposed that health care clearinghouses and health care providers must begin using the standard specified in Sec. 142.602, now Sec. 162.605, no later than 24 months after the effective date of the final rule.