The Basics of HIPAA (Part 2)

Monday, we began a discussion about the Health Insurance Portability and Accountability Act (HIPAA) and reviewed two of its early provisions:  Portability and Medicare Program Integrity.  Today, let’s review the most important aspect of HIPAA for the majority of providers.

Administrative Simplification

Did you know that, prior to HIPAA, there were over 400 formats for submitting electronic claims?  The administrative simplification provisions of HIPAA reduced the number of forms and methods of completing claims, and other payment-related documents.  In short, HIPAA standardized the way information is transmitted, making your job a lot less complicated.

By forcing insurance companies to use the same format for their transactions, HIPAA actually saves your practice time and money.  The staff is able to send more information, faster, and spend less time in wasted efforts.

Of the transactions covered under HIPAA, these are the most important for the medical practice environment: eligibility, claims, health claim status, payment and remittance advice, and referral certification & authorization. HIPAA makes it possible for information to flow in one standard format, which makes it easier for computers to “talk” to each other.

One way to do this is to make sure everyone speaks the same “language.”  For computers, language usually means numbers.  That’s why we use ICD-9-CM and CPT-4/HCPCS codes.  These standard codes mean the same things to everyone.  HIPAA made it mandatory for everyone to use the same codes.  Scan you believe that some insurance companies had actually made up their own codes for certain procedures?!  No wonder billing was such a complicated endeavor!

Two other components of HIPAA are the security rule and the national identifiers.  The security provisions protect all electronic health information from improper access or alteration, and against loss of records.  The identifier component of HIPAA creates one unique identifying number for each provider, employer, individual and insurance payor.  This means that, as patients, our health records aren’t identified by our social security number.  For providers, this means simplicity.  Did you know that a single provider may have had more than 30 provider numbers, depending on which insurer you were dealing with?  One standard number simplifies work for you in the office and may also makes it easier for providers to be recredentialed by the various insurance plans.

Next time we meet, we’ll review the basics of who governs HIPAA and who is required to comply with it.  You might learn some surprising information. See you then!