Overview
Administrative Simplification
National Standards for All Providers
An Interconnected System
Conclusion

The intent of HIPAA (the Health Insurance Portability and Accountability Act of 1996) is to fundamentally change the way health care information is collected, stored and exchanged. HIPAA includes a wide array of provisions designed to make health insurance more affordable and accessible. With support from health plans, hospitals and other health care businesses, Congress included provisions in HIPAA to adopt national standards for certain electronic health care transactions, codes, identifiers and security. HIPAA will put into place national standards that will transform the current patchwork of conflicting and proprietary health information systems into an interconnected system where information flows easily between providers, insurers and payers.

Administrative Simplification
Today, health plans, hospitals, pharmacies, doctors and other health care entities use a wide array of systems to process and track health care bills and other information. Hospitals and doctors’ offices treat patients with many different types of health insurance and must spend time and money ensuring that each claim contains the format, codes and other details required by each insurer. Similarly, health plans spend time and money to ensure their systems can handle transactions from various health care providers and clearinghouses. To improve the efficiency and effectiveness of the health care system, HIPAA included a series of “administrative simplification” provisions. By ensuring consistency throughout the industry, these national standards will make it easier for health plans, doctors, hospitals and other health care providers to process claims and other transactions electronically.

National Standards for All Providers
In addition, uniform national standards will save billions of dollars each year for health care businesses by lowering the costs of developing and maintaining software and reducing the time and expense needed to handle health care transactions.

An Interconnected System
HIPAA transactions will revolutionize healthcare administration for providers, payers and patients through the standardization of formats and code sets, the leveraging of technology to increase automation through electronic data interchange (EDI) and the portability of patient records.

Conclusion
In the long run, HIPAA not only specifies standards to be implemented October 16th, 2003, it also sets up a process to create and refine national standards to continuously improve the automation of health care information.

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