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HIPAA
Overview
HIPAA is the federal Health Insurance Portability and Accountability Act
of 1996, passed with bipartisan and widespread support of the health care
industry. Its primary purpose is ensuring the portability and continuity
of health insurance, particularly when individuals change jobs. A
lesser-known aspect of the law is the Administrative Simplification
provision.
HIPAA Administrative Simplification is implemented through federal
regulations issued by the Department of Health and Human Services (DHHS).
Its purpose is to reduce the costs of the administration of health care by
encouraging increased automation of billing and other transactions. Such
automation is facilitated and made more affordable through
standardization.
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At the core
are standards for the content and format of electronic transactions used
in billing, payment and other health care administrative functions.
These standards use Electronic Data Interchange (EDI) technology which
has become widely used in banking and other industries.
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Other
standards enable the core transaction standards.
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Because
automated information can be more accessible and more easily abused,
new regulations will govern the privacy and security of patient
information.
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Another set
of regulations will provide nationwide, standard identifiers for
providers, health plans and employers.
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A final
regulation will cover enforcement of the rules.
All
standards are based on existing, national, industry standards whenever
possible.
The Administrative Simplification provisions of HIPAA apply to three kinds
of "covered entities" specified in the law.
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Health plans
are generally defined as any individual or group plan that provides or
pays for medical care. Not all public programs which provide or pay for
health care are covered. Covered health plans must be able to process
any standard electronic transactions they receive.
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Any health
care provider that transmits health information in electronic form in
connection with one of the transactions used in providing or paying for
health care. Providers may continue to conduct transactions manually,
but any covered transactions they do electronically must meet the
standards (unless they are using a clearinghouse).
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Healthcare
clearinghouses, which translate electronic transactions between standard
and non-standard forms.
Whether an entity is "covered" under HIPAA applies to the privacy as well
as the transactions rule (only these two rules are final as of the writing
of this summary). Business associates of covered entities are also
impacted by HIPAA when they perform covered transactions on behalf of a
covered entity, or when they receive protected patient health information
from the same.
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