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Health Insurance Portability and Accountability Act of 1996

HIPAA stands for the Health Insurance Portability and Accountability Act, also known as Kennedy-Kassebaum Act, which was signed into law August 21, 1996. The section of the act which we are making you aware of is subtitle F- Administrative Simplification.

The purpose of the legislation is to improve the efficiency and effectiveness of the health care system by standardizing the electronic exchange of administrative and financial data; and to protect the security and privacy of transmitted information. In other words, you will no longer have to worry about what format information is submitted to each insurance plan because they will all be standard. The law also includes provisions for unique identification numbers for all providers, patients, payers, and employers. Code sets will also be standardized along with provisions for security and privacy of identifiable health information.

The standards being mandated are:

  • Health claims or encounters (ANSI 837)
  • Enrollment (ANSI 834)
  • Eligibility, inquiry and response (ANSI 270/271)
  • Remittance Advice (ANSI 835)
  • Premium Payments (ANSI 820)
  • Claims Status, inquiry and response (ANSI 276/277)
  • Referrals (ANSI 278)
  • Pharmacy claims (NCPDP)
  • HIPAA standard code sets: HCPCS, CPT4, CDT3, and ICD9

On August 17, 2000 the final rule was published which requires ANSI version 4010a1 electronic formats for the specified electronic healthcare transactions and the above mentioned HIPAA Medical code sets be adopted within 26 months (of date the final regulations are published in the Federal Register). "Small" health plans will be allotted 36 months. Health Plans were given a one-year extension and on October 16, 2003 BCNEPA became compliant with the HIPAA code set and transaction standards.

Providers can also choose to utilize a clearinghouse to translate their electronic transactions into standard formats, if they are not capable of complying with the standards. Non-compliance with provisions of the Act will result in significant financial penalties.

The following is the schedule for which the Department of Health and Human Services (DHHS) is planning to issue HIPAA regulations.

NPRMs Already Published
Standard NPRM Published Final Rule Publication Date Compliance Required
Transactions and Code Sets 5/7/1998 8/17/2000 10/16/2002
National Provider Identifier 5/7/1998  1/23/2004  5/23/2007
National Employer Identifier 6/16/1998  5/31/2002  6/30/2004
Security 8/12/1998  8/12/1998  4/20/2005
Privacy 11/3/1999  12/28/2000  4/14/2003

NPRMs in Development
Standard Expected NPRM Publication Expected Final Rule Publication Expected Date Compliance Required
National Health Plan Identifier  Fall 2005    
Claims Attachments  Summer 2005    
National Individual Identifier ON HOLD
*Standards are required to be implemented within 2 years of the effective date of the final rule. (The effective date of the final rule is generally 60 days after its publication,)

If you would like additional information on HIPAA, noted below are Web sites you may want to consult.

  • Department of Health and Human Services; to obtain information on HIPAA, Proposed and Final Rules

  • Washington Publishing Company; to obtain implementation guides