Health Insurance Portability and Accountibility Act

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Summary of HIPAA

The Health Insurance Portability and Accountability Act (HIPAA) of 1996 became law when President Clinton signed H.R. 3103 on August 21, 1996. The purpose and goal of the HIPAA law is to promote and improve the efficiency, effectiveness and security of the nation's healthcare system and sensitive patient information by mandating the development of health information systems that utilize EDI for all administrative and financial transactions between information trading partners as specified in the law.

HIPAA also establishes a set of national transaction standards to ensure that electronically transmitted information is readily accepted and recognizable by transaction recipients.

HIPAA further requires that all information trading partners using these transactions for healthcare follow the guidelines established by national implementation standards. For health care providers, insurers, and employers; one or more of the following scenarios will likely prevail to support compliance with the law:

• Software vendors will have to significantly upgrade relevant functionality to support your compliance.
• New vendors and new products may become available to "wrap-around" current IT implementations allowing them to remain relatively unchanged.
• A new breed of service providers will offer transaction services, also allowing current IT implementations allowing them to remain relatively unchanged.
  

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Health Insurance Portability

The Health Insurance Portability and Accountability Act (HIPAA) of 1996 insures as its first objective, a guarantee of health insurance portability for employees and their family members following a job action such as a lay-off, or change of job instigated by the employee.

Under HIPAA Title I, "HEALTH CARE ACCESS, PORTABILITY, AND RENEWABILITY", employers and health plans must allow a new employee's medical insurance coverage to remain continuous without regard to pre-existing conditions.

The Health Insurance Portability and Accountability Act (HIPAA) of 1996 provides the following:

• New underwriting policies and requirements for self-funded health plans under the rules and regulations of ERISA.
• New protections for persons whose group coverage has been terminated.
• Federal guidelines for insurance underwriting practices of both small and large groups.
  

Patient Information Confidentiality

Under HIPAA Title II, "PREVENTING HEALTH CARE FRAUD AND ABUSE; ADMINISTRATIVE SIMPLIFICATION; MEDICAL LIABILITY REFORM" new requirements for privacy and security of individually identifiable patient information are defined.

Health care providers, insurers, TPA's, medical billing agents, clearinghouses, and employers are responsible to comply with the requirements of the administrative simplification and privacy act.

Pending further definition by way of legislation, the Department of Health and Human Services will be the defining agency for the rules of privacy.
Since all organizations that handle patient-identifiable health care information--regardless of size--need to adopt a set of technical and organizational policies, practices, and procedures.

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HIPAA FAQ's

• By all accounts and estimates, it is believed that as much as $26 billion may be saved by instituting X.12 EDI standards on an industry wide basis.
• The Health Insurance Portability and Accountability Act (HIPAA) of 1996 is the most comprehensive and sweeping legislation for health care since Medicare was instituted.
• EDI transactions are governed by HIPAA standards. Health care transactions not in compliance are relegated to paper.
• DHHS is within weeks of a "final document" for rules governing implementation. The industry will have two years to act once it is published.
• Many industry and government analysts expect implementation of HIPAA to exceed Y2K in cost and scope.
• Reduction in paperwork and administrative overhead will eliminate a significant portion of the $.20 of every dollar now spent on health care delivery. an additional $.11 will be saved eliminated fraud and abuse.
  

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