Hipaa Administrative Simplification – 2 Transaction And Identifier Standard Rules

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Health Insurance Portability and Accountability Act (HIPAA) strives to maintain a constant insurance cover for you even in the event of changing jobs or losing one. It goes further by requiring all your personal information to be kept safe through a host of safeguards. While framing rules to cover the diversity of healthcare is no easy task, the Act also has to ensure compliance of such provisions. Through a set of Administrative Simplification rules HIPAA tries to maximize the effectiveness of healthcare by prescribing certain standards and identifiers on a National level for better management and transaction of electronic healthcare.

HIPAA requires the following 2 Transaction and Identifier standards to be adopted by healthcare providers including nursing homes, clinics pharmacies, doctors, dentists, psychologists and chiropractors. And also by a health plan like health insurance companies, company health plans, Health Maintenance Organization (HMO) and Medicaid and Medicare which fall under government programs.

– Transactions and Code Set Standards: Activities that involve any transfer of healthcare information are referred to as transactions, and are made for specific purposes. The HIPAA rules require that all the covered healthcare providers and health plans follow the set transaction standards while carrying out the designated transfer activities. The rules provide specific standard codes for identifying procedures and diagnoses. The codes cover a comprehensive list of the transactions involving claim, payment and information. A claim transaction may be sent by the provider directly to the payer or through a clearing house. Furthermore a healthcare eligibility or benefit enquiry transaction code may be used for enquiry and a benefit response transaction code is used for responding to the same. Claim status may be sent for knowing the position of a certain health claim while a notification set may be sent by the payer to the provider or recipient for informing claim status or even for requesting further information. It is the responsibility of the provider and health plans to ensure that their transactions comply with the relevant HIPAA rules.

– Identifier Standards for Employers and Providers: As per the requirements of HIPAA, all employers must source an Employer Identification Number (EIN) from the Internal Revenue Services (IRS) which is a national number to be used in all standard transactions for identification purposes. Similarly all healthcare providers, health plans and even clearing houses must have a National Provider Identifier (NPI) for identification. This number must be used for all electronic transactions at the national level. Interestingly, the 10-digit unique NPI number is not an intelligent number, which means it is solely used as an identifier and does not contain the location or specialty information about the provider. And though all the other numbers used by health plans and government programs have been replaced by NPI, the tax identification, DEA and state license numbers of a provider remains unchanged.

By having such standard transaction and identifier rules HIPAA is trying to bring uniformity at a national level which not only increases efficiency in healthcare but is in line with the goals of Administrative Simplification. Moreover it helps to have an increased level of security and privacy while transmitting sensitive information.


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