The “Health Insurance Portability and Accountability Act of 1996,” known as HIPAA, includes four key components:  Electronic Transactions, Portability, Privacy and Security.

HIPAA allows persons to qualify immediately for comparable health insurance coverage when they change their employment or relationships. It also creates the authority to:

  • mandate the use of standards for the electronic exchange of health care data;
  • specify what medical and administrative code sets should be used within those standards;
  • require the use of national identification systems for health care patients, providers, payers (or plans) and employers (or sponsors); and
  • specify the types of measures required to protect the security and privacy of personally identifiable health care.

The Administrative Simplification provision under the Affordable Care Act of 2010 includes requirements to adopt:

  • operating rules for each of the HIPAA covered transactions
  • a unique, standard Health Plan Identifier (HPID)
  • a standard and operating rules for electronic funds transfer (EFT) and electronic remittance advice (RA) and claims attachments.

In addition, health plans will be required to certify their compliance. The Act provides for substantial penalties for failures to certify or comply with the new standards and operating rules.