Health Insurance Portability and Accountability Act (HIPAA)

What is HIPAA?

The Health Insurance Portability and Accountability Act (HIPAA) of 1996 contains the following three major provisions:

  • Portability
  • Medicare Integrity Program/Fraud and Abuse
  • Administrative Simplification

The portability provisions, implemented in 1997, provide available and renewable health coverage and remove the pre-existing condition clause, under defined guidelines, for individuals changing employers and health plans.

The Medicare Integrity Program (MIP) implemented in 1998, guarantees that the Health Care Financing Administration (HCFA) has a funding source for integrity activities and expands its authority to hire anti-fraud contractors.

The administrative simplification provision implemented standard transaction and code sets, identifiers, security, and privacy rules across the health care industry.

Administrative Simplification Requirements of HIPAA

The four major requirements of administrative simplification follow:

The requirements promote electronic transactions, regulate format and content standards, and create conforming security and privacy standards. The Transaction and Code Set final rule was published in the Federal Register August 17, 2000, and became effective October 16, 2000. The rule required full compliance for large health plans (including federal and state programs), clearinghouses, and providers by October 16, 2002.

Entities Affected by the HIPAA Administrative Simplification Requirements

All the following entities are affected by the HIPAA administration simplification requirements:

  • All health plans, including Medicaid, Medicare, and commercial plans
  • Providers that transmit or store health information electronically
  • Health care clearinghouses

It is important to obtain a copy of this rule and review it thoroughly to determine the effects HIPAA will have on your organization's systems and business processes. The final rule defines the requirements and standards that you must implement to comply with HIPAA regulations. This rule can be accessed at

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