Health Insurance Portability &
Accountability Act - Administrative Simplification

Congress passed the Health Insurance Portability and Accountability Act of 1996 – HIPAA – which requires that the Secretary of the US Department of Health and Human Services adopt standards for numerous electronic healthcare transactions, identifiers, security, and privacy. The standards will be binding on virtually all healthcare Plans, including Medicare and Medicaid. Within two years of the effective date of publication of these final rules, Medicare, Medicaid, and other payers must complete their conversion to use these standards or be subject to sanctions and penalties.

Providers are required to use these standards when they use electronic transactions for data exchanges of the types specified in the regulations. However, Medicare and Medicaid must be able to exchange each of these transactions electronically, even if they do not currently support electronic exchange of these types of data.

Within two years of the effective date of the HIPAA standards, Medicare, Medicaid, and other payers will be prohibited from electronically exchanging data with providers or other payers for coordination of benefits in a transaction unless that data is in HIPAA Administrative Simplification-approved standard and version. Furthermore, payers will be prohibited from use of codes, identifiers, or data elements that do not comply with the implementing regulations for these HIPAA standards. Payers will be prohibited from making any modification to the standards implementation guides.

The HIPAA Administrative Simplification requirements will have a major impact on the way we do business. In the short term, implementation will require significant resources – money, staff, and time. In the long term, cross industry standardization will result in improvements in healthcare data exchanges leading to program savings.

DHS and EDS will be hosting several informational seminars over the next few months to familiarize State and Provider staffs about some of HIPAA’s new rules and protocols and its impact on the RI Medicaid Program. We will continue to publish HIPAA requirements, as they become known. For additional information on HIPAA, visit the following Web sites.

www.cms.hhs.gov	CMS' home site; HIPAA page
www.wpc-edi.com	Washington Publishing Company - data transaction set standards and protocols; Code messaging
www.ehnac.org	Electronic Healthcare Network Accreditation Commission
www.ps-tag.org	Private Sector Technical Assistance Group – white papers on HIPAA financial considerations
www.rx2000hipaa@rx2000.org	listserv group featuring daily discussions about HIPAA policy and implementation

Health Care Financing Administration Memorandum, March, 2000