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No Rest for the Compliance Weary in 2004

Many insurance carriers are playing post-deadline compliance catch-up in 2004

Many CIOs are still suffering from headaches caused by last year's spurt in new regulatory requirements, and 2004 promises much of the same. And although it may be too soon to forecast compliance woes for the second half of this year, Craig Weber, senior analyst, Celent Communications (New York), projects business as usual in 2004. Unfortunately for those affected, that prediction is not a positive one. "There will be no rest for the weary [in the new year]," relates Weber. "There is always going to be something to keep [management] awake at night."

Complications are due in part to "the complexity and breadth of systems," contends Weber, who says that it's difficult to comply 100 percent with regulations, given the different ways that carriers distribute information. Instead of trying to boil the ocean "most are addressing the most sensitive areas first, because they understand that they are not going to be in complete compliance," he says. "Insurers who follow the letter of the law have an awful big task ahead of them."

But it's not always overworked insurance technologists who are stalling regulatory compliance. Some carriers are waiting for business partners withwhich they exchange information to get up to speed. For instance, many smaller health insurance carriers are waiting for the nod from providers before they comply with the Oct. 16, 2003, HIPAA transaction and code sets deadline.

"There is still tons of work to be done in this area," says Brian Casey, partner, corporate and regulatory insurance practice group, Lord, Bissell & Brook (Atlanta). "A lot of healthcare providers are not ready to transmit and receive data" in the required form. In some cases insurers are able to wait to become compliant because complaints about non-compliance are driven by healthcare providers, which in many cases are not yet compliant.

Although a non-official compliance extension may seem like a blessing for time-strapped technologists, it's not necessarily best for the carrier. Casey, who predicts that wider-spread transaction and code set compliance will be adopted near the end of Q1 2004, relates that the cost of maintaining both compliant and non-compliant systems can hurt carriers' wallets. Casey relates that "carrying the costs of the old systems [with compliant systems] will hurt the overall cost, and thus the profitability, of claims systems."

Do Not Call Hurdles

On another front, although it is not as costly as HIPAA compliance, some carriers have not yet become fully compliant with federal Do Not Call (DNC) legislation, according to Celent's Weber. Many insurers are still grappling with issues associated with joint marketing, co-branded partnerships and their producer force. "Some carriers have a business model that doesn't involve outbound telemarketing from their home office," says Weber. "For those carriers, DNC regulations are less of an issue, but if [those insurers] have agents making the calls, they have to be in compliance as well."

Regulatory specifics regarding outbound calls made on behalf of one's company depend "on how agents represent themselves on the call," says Celent's Weber. "If an agent is representing a specific [insurance] company and product then the insurer is on the hook. If the agent is calling as an independent broker then the agent is on the hook." But no matter where the marketing message originates, insurance companies may have to consider alternate marketing conduits. "If carriers can't cold call they will turn to e-mail marketing or outbound faxes, and those are already being addressed by regulation," says Weber. According to Casey, 24 states currently have anti-spam laws, and the number passing similar legislation is growing. "We may see something similar to the DNC regulations with spam in the future," says Casey. "Spam is just as much an irritant as telemarketing calls are. It's just that calls have been around longer."

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