The Health Insurance Portability and Accountability Act (HIPAA) became law in August 1996. It's primary purpose is to enable employees and their families to transfer health care benefits from one employer to another and to continue coverage after a layoff.

Congress recognized that this new law would impose an additional administrative burden on providers, payers and employers. It noted that the efficiency and cost-effectiveness of the overall healthcare system can be improved significantly by eliminating the administrative burdens associated with paper-based processes.

Administrative Simplification

HIPAA includes a section called Administrative Simplification (AS). This section is intended to improve the efficiency and effectiveness of healthcare systems. It recognizes the increased risks imposed by the move to electronic transactions. The law calls for compliance with a security standard designed to protect the confidentiality and integrity of health information and the information technology used to store, process and transmit it. The HIPAA-AS provisions cover five distinct areas relating to the handling of health care transactions

1. Electronic data transaction standards
2. Code set standards
3. Standards for unique health identifiers
4. Security standards
5. Privacy protection

Except for the security standard, which applies to all health information that is electronically maintained or transmitted, the provisions of Administrative Simplification apply to the transmission of all health care information.

Final Standards

The Department of Health and Human Services drafted the final standards. The first release date was August 17, 2003 the second was December 28, 2003. The standards were required to be implemented within two years of the effective date of the respective rules, except for small group plans, which have an additional year to comply.

More details

The HIPAA standards represent a major step in making healthcare an "e-Business." Meeting these standards will affect business operations and information technology infrastructure. They represent a unique opportunity to streamline your operations and reduce administrative costs.

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