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All health care providers will soon be affected by federally mandated standardization of health insurance billing

Today, patients who walk into a drugstore to purchase prescribed medication can simply swipe their insurance card, which enters their insurance and personal identification data in the pharmacists' information system. In turn, the pharmacist keys in the drug information and the system determines the patient's eligibility, coverage for that drug, and copayment responsibility. The pharmacist later receives electronic payment for the portion of the prescription costs not paid by the patient. Under a portion of the 1996 Health Insurance Portability and Accountability Act (HIPAA), which is scheduled to become effective in 2002, similar transactions will be possible in physicians' offices, hospitals, and outpatient clinics.

The goal is standardization of health insurance billing to reduce billing costs and time, provide greater certainty of coverage and payment responsibility, and establish a privacy standard for personal health information. J. Michael Fitzmaurice, Ph.D., of the Agency for Healthcare Research and Quality, and Jeffrey S. Rose, M.D., of CyberPlus Corporation, recently published an article in which they described several key features of the HIPAA legislation.

First, health care providers do not have to engage in electronic health transactions, but if they do, they must comply with HIPAA transaction data standards. Second, health plans must be able to accept transactions in a standard HIPAA format, may not refuse or delay a transaction, or adversely affect the entity sending it for lack of proper content. Those covered by HIPAA security and privacy standards must protect the health care information they maintain and transmit electronically from improper access, alteration, or loss and must not wrongfully disclose individually identifiable health information. However, some major barriers to HIPAA implementation remain: the costs of making the transition to meet the legislated standards, testing and certifying that covered entities meet HIPAA standards, and obtaining resources to implement and maintain features like the national provider identifier (a 10-digit code for use in electronic claims processing that will be unique to each provider and assigned for life).

See "Cutting to the chase: What physician executives need to know about HIPAA," by Drs. Fitzmaurice and Rose, in the May 2000 issue of The Physician Executive 26(3), pp. 42-49.

Reprints (AHRQ Publication No. 00-R041) are available from the AHRQ Publications Clearinghouse.

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