| The Health Insurance Portability
and Accountability Act of 1996 (HIPAA) was passed to reform
the insurance market and simplify health care administrative
processes. HIPAA is comprised of several components aimed
at improving efficiency of health systems, reducing paperwork,
and ensuring protection of confidentiality and security of
healthcare information.
The administrative simplification part of HIPAA is aimed
at reducing administrative costs and burdens in the health
care industry by adopting the use of standardized, electronic
transmission of administrative and financial data. HIPAA
will have a significant impact on the health care industry
over the next several years.
The five specific areas of administrative simplification
addressed by HIPAA are:
- Electronic Data Interchange (EDI) - The
electronic transfer of information in a standard format
between trading partners. It allows partners to exchange
information and transact business in a fast and cost-effective
way. The transactions that are included within HIPAA consist
of standard electronic formats for enrollment, eligibility,
payment and remittance advice, claims, health plan premium
payments, health claim status, and referral certification
and authorization.
- Code Sets - Includes data elements used to uniformly
document the reasons why patients are seen and what is
done to them during their health care encounters (procedures).
- Identifiers - Numbers used in the administration
of health care to identify health care providers, health
plans, employers, and individuals (patients). Over time,
this is intended to simplify administrative processes,
such as referrals and billing, improve accuracy of data
and reduce costs.
- Security - Standards need to be developed
and adopted for all health plans, clearinghouses, and
providers to follow and to be required at all stages of
transmission and storage of health care information to
ensure integrity and confidentiality of the records at
all phases of the process, before, during and after electronic
transmission.
- Privacy - standards to define appropriate
and inappropriate disclosures of individually identifiable
health information and the methods by which patients’
rights are to be protected.
The benefits of HIPAA include lowering administrative costs,
enhancing accuracy of data and reports, increasing customer
satisfaction, reducing cycle time and improving cash management.
The Health Insurance Portability and Accountability Act of
1996 contains regulations that mandate the following functions
by each health care payer:
- Accept electronic claims from all providers of
service in a pre-defined uniform format
- Pay claims electronically and submit EOB (Explanation
of Benefits) in an electronic format
- Verify eligibility of covered members and dependents
on line.
- Query the status of claims submitted, available
to providers and members
- Institute privacy rules to protect medical information
The final HIPAA rule also mandates the use of the following
eight transaction standards:
- Healthcare claims and equivalent encounter information
- Eligibility for a health plan
- Referral certification and authorization
- Healthcare claim status
- Enrollment and disenrollment in a health plan
- Healthcare payment and remittance advice
- Health plan premium payments
- Coordination of benefits
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