• Debra Lynn Banks.
• Governors State University, I University Pky, University Park Illinois 60466-0975, USA. debrabnks7@aol.com
• J Med Syst. 2006 Feb 1; 30 (1): 45-50.

AbstractThe Health Insurance Portability and Accountability Act of 1996 (HIPAA) was passed by Congress with two formidable tasks: (1) reform the insurance market; and (2) simplify healthcare administrative processes. From these ambitious beginnings, HIPAA has since taken on major healthcare issues including administrative simplification, security, privacy, and patient confidentiality. In November 1997, the Secretary of Health and Human Services (DHHS) introduced the proposed "standards" for what is referred to as "administrative simplification". But, establishing the standards and guidelines necessary for administrative compliance was not an easy undertaking. DHHS estimated that 400 different formats were used in the US for healthcare claims processing. Three years later (August 2000), the Final Rule for Standards for Electronic Transactions and Code Sets was published by DHHS. The rule provided for national standardization of the most common healthcare transactions and several code sets. The compliance deadline for implementation of the new transactions and code sets was set for October, 2002. In January 2001, Congress enacted The Administrative Simplification Compliance Act to provide the industry with additional time to reach compliance. Yet, recent survey results by Phoenix Health Systems and the Health Information and Management Society (HIMSS) indicate many providers and payers are not fully compliant with the security and privacy regulations mandated by HIPAA. This issue threatens the effectiveness of administrative simplification and the integrity of healthcare information. Overall, HIPAA does offer the promise of a more efficient and effective means of sharing and disseminating vital healthcare information. But, many experts have concerns that the implementation and maintenance of HIPAA standards and policies will become a financial burden for many in the healthcare industry. Although DHHS has established mandates for the healthcare industry, many deadlines have been extended and the standards of administrative simplification continue to evolve over time. Others question whether the Department of Health and Human Services is capable of spearheading an information technology revolution in the healthcare industry. Unfortunately, it may take several years before the industry is able to realize any true cost savings from administrative simplification. Yet, few can question how HIPAA has revolutionized information technology in the healthcare industry.

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