Since its inception, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) has been studied, discussed and dreaded, as healthcare providers anticipated and evaluated proposed changes to this slowly evolving regulation.

In August, the final health data formatting and transaction standards were released. The new federal rule establishes standard data content and formats for submitting electronic claims and other administrative health transactions, which must be adopted by October 2002. A single set of electronic health claim formats will replace the approximately 400 that exist today.

HCFA believes that greater use of electronic transactions and the elimination of inefficient paper forms should provide net savings of $29.9 billion to the healthcare industry over 10 years.

In this article, we'll help you understand the new rule, so that your practice can enjoy some of these benefits.

Universal usage

All healthcare providers will have the option of using the electronic format to bill for their services, and all health plans will be required to accept the electronic standards for claims, referral authorizations and other transactions.

While some have viewed the standards as potentially burdensome and costly to implement, others see them as an opportunity for health care to make great strides in using the Internet.

Privacy a priority

For those concerned about putting sensitive information on the Internet, the standards include strict guidelines for security and the protection of privacy during healthcare transactions.

Another priority is standardizing the code sets. Under HIPAA, a "code set" is any group of codes used for encoding data elements, such as tables of terms, medical concepts, and medical diagnosis or procedure codes. You can find the official code sets on the Internet at: http://aspe.os.dhhs.gov/admnsimp/
faqcode.htm#whatiscodeset.

Several studies have indicated that health care is still far away from realizing great cost savings by using electronic data interchange, simply because the information technology (IT) infrastructure hasn't yet been developed. Perhaps one of the most pressing problems in meeting the compliance deadline is participants actually having IT systems in place so that they'll be prepared to comply with the new regulation.

Here's help

In the very short term, payers and providers may delay IT purchases as they study the new standards. But being "HIPAA-ready" will mean more than just upgraded IT systems. HIPAA will require wholesale changes in business processes, development of new types of relationships, and even changes in some procedures that aren't IT focused.

Here are two resources that can help you meet the new guidelines:

�        HCPro has an online, downloadable book designed to assist healthcare providers and payers in complying with HIPAA standards at www.hcpro.com.

�        You can obtain a copy of the Federal Register containing the electronic standards document by logging on to http://aspe.hhs.gov/admnsimp.

By informing yourself about the new rule now, you'll be able to take full advantage of the opportunities that the standardization of electronic claims formats will offer to your practice.

Dr. Gable is chief executive officer of Dynamic Health Connections, Inc., in Lake Forest, Calif., which provides specialized consulting expertise for subspecialty physician groups, managed care organizations and other medical organizations. You can reach him at dhc38@aol.com.