Health Insurance Portability and Accountability Act

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Passed in 1996, Public Law 104-191, known commonly as the Health Insurance Portability and Accountability Act (HIPAA), is a piece of legislation designed to increase the ease with which medical and administrative data can be exchanged and transferred between various institutions, organizations and health care facilities. The overarching purpose of the Health Insurance Portability and Accountability Act is to ensure that maximum efficiency can be achieved in the transfer and exchange of health, administrative and financial data and that these exchanges will be carried out with the highest degree of confidentiality possible.

Although Health Insurance Portability and Accountability Act is a complex piece of legislation rife with a number of clauses, caveats and codicils, there are three core objectives that can be identified in the various sections of the law.

These include:

(1) the development and implementation of exacting security measures, designed to achieve the highest degree of patient confidentiality possible;

(2) the establishment of a standardized administrative system in which each separate health care facility, employer, patient, and insurance plan is designated by a uniquely encoded identifier; and

(3) overall standardization of the handling of administrative and health data among involved parties, including health care facilities and insurance companies.

Clearly, the conditions set forth in the Health Insurance Portability and Accountability Act legislation will necessitate massive, sweeping changes in the American health care industry. In the past, each individual health care facility has maintained its records in a way that was best suited to the unique purpose of the particular organization or office.

As a result, there exists little or no standardization between health care facilities and organizations in the bulk of patient records. The amount of time and financial resources that will be necessary to design and implement a standardization and security system that can be used at every level of the American health care industry will no doubt be staggering.

The sheer magnitude of the range of offices affected by Health Insurance Portability and Accountability Act is in itself extraordinary. Any office, organization or agency that deals with patient records of any kind must comply with the guidelines set forth in Health Insurance Portability and Accountability Act. This extends to include such diverse facilities as private-sector employers, universities, single-physician offices, medical billing firms, health insurance plans, public health agencies and facilities, life insurance organizations, data clearinghouses, and information systems dealers.