The HIPAA Mandate


The U.S. Congress enacted the Health Insurance Portability and Accountability Act (HIPAA) to reform the health insurance market. HIPAA requires national, uniform standards for the electronic transmission of health care information to simplify the health care administration and financial processes.

The iWay Integration Solution for HIPAA, based on these standards, promotes the integration of over 200 enterprise data and application systems.

The Health Insurance Portability and Accountability Act of 1996 (Public Law 104-191, known as HIPAA) includes a provision for Administrative Simplification. This provision required the Secretary of the Department of Health and Human Services to adopt standards to support the electronic exchange of administrative and financial health care transactions, primarily between health care providers and health care plans.

HIPAA mandates the adoption of standards for such transactions and defines specifications for implementing each standard. The iWay Integration Solution for HIPAA is based on the addenda version of HIPAA 004010, which was released in October, 2002, and is referred to as 004010A1.

Achieving Administrative Simplification

Administrative Simplification means adopting uniform business practices (billing, computer systems, and communication) so that providers and payers can easily interact through one another's proprietary systems.

The Administrative Simplification provisions of HIPAA standardize forms and methods of completing claims, and other payment-related documents, and assign a universal identifier to health care providers. These provisions serve to increase computer use and efficiency when exchanging health care information.

HIPAA addresses the following areas of Administrative Simplification:

  • Electronic Data Interchange (EDI) is the electronic transfer of information between trading partners in a standard format. It enables partners to exchange information and transact business quickly and efficiently. HIPAA includes standard electronic formats for transactions such as enrollment, eligibility, payment and remittance advice, claims, health plan premium payments, health claim status, and referral certification and authorization.
  • Code sets include data elements that uniformly document why patients are seen and what treatment (procedures) they receive during health care encounters.
  • Identifiers are numbers that identify health care providers, health plans, employers, and individuals (patients). These identifiers simplify administrative processes such as referrals and billing, improve accuracy of data, and reduce costs.
  • Security refers to the mandatory standards developed and adopted for all health plans, clearing houses, and providers. Everyone involved in the health care industry is required to comply at all stages of transmission and storage of health care information. This compliance ensures the integrity and confidentiality of the records at all phases of the process.
  • Privacy refers to standards that define appropriate and inappropriate disclosures of individually identifiable health information and protection of patient rights.

The benefits of Administrative Simplification include:

  • Lowered administrative costs
  • Enhanced accuracy of data and reports
  • Increased customer satisfaction
  • Reduced cycle time
  • Improved cash management

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