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HIPAA

Health Insurance Portability & Accountability Act of 1996

As a means to reduce health care costs, HIPAA was enacted and signed into law on August 21, 1996.

HIPAA has three key components:

Portability

Accountability

Administrative Simplification

Portability

The Portability component of HIPAA allowed individuals changing from one insurance plan to another continuous coverage. It also prevented any claims to be denied as pre-existing conditions due to this change.

Accountability

The Accountability component of HIPAA was enacted to enforce accountability, hence preventing health care fraud and abuse.

Administrative Simplification

This component is in the process of being finalized, whereby compliance dates are approaching. The Accountability component was developed to improve the healthcare system by making processes more efficient through standardizations. One of the ways standardizations was going to be met was through standardizing electronic transmission of data. In addition, privacy and security of patient health information was enforced. This component is broken down further into four key subparts:

Transaction & Code Sets Standard

This standard requires the usage of approved code sets such as International Classification of Diseases - 9th Division (ICD-9CM), American Medical Association's Current Procedural Terminology (CPT) Codes, Health Care Procedure Coding System (HCPCS), CDT, and NDC.

In addition, it requires submission of health care data electronically if you are a covered HIPAA entity. Covered entities include any entity that submits electronic transactions or has 10 or more full-time employees.

Unique Identifier Standard

This standard requires the usage of the National Provider Identifier (NPI). The NPI is a unique 10-digit alphanumeric identifier  with a check digit in the last position. Each health care provider needs to apply for an NPI and start using it on the CMS-1500 claim form as of May 23, 2007. In addition, if you are incorporated, an NPI application for the corporation needs to be completed as well.

Privacy and Confidentiality Standard

The Privacy standard safeguards against unauthorized access to protected health information (PHI). It also provides patient rights access to their own medical records.

Security Standard

This standard enforces the security of electronic health information that is retained or electronically transmitted. In addition, it limits access to health information to only authorized individuals / entities. The five subparts of the Security Standard includes:

• Administrative Procedures

• Electronic Signatures

• Physical Safety Guidelines

• Technical Security Mechanisms

• Technical Security Services