Fact Sheet

Health Insurance Portability and Accountability Act (HIPAA)
Fact Sheet about Transaction Exchange
Also available as: HIPAA Fact Sheet.pdf (14K | 1.13.03)

HIPAA Overview

HIPAA is national legislation that mandates how specific electronic transactions, such as claims, are formatted and exchanged. The primary purpose of these new regulations is to improve the effectiveness and efficiency of the health care system by standardizing the electronic transmission of certain health information.

Transactions, Code Sets, and Identifiers are fundamental to HIPAA transactions

Transactions (T) = standardized data formats and content used for transactions such as Eligibility Inquiry and Response, Claims (submission), Claim Status Inquiry and Response, Referrals and Authorizations, and Remittance Advice.

Code Sets (CS) = industry standard code sets such as ICD-9-CM, CPT-4, and HCPCS. There are also Code Sets for administrative codes that enable common verbiage for things such as Claim Adjustment Reason and Health Care Claim Status.

Identifiers (I) = standardized unique identifiers such as a National Provider Identifier (NPI) number and National Employer Identifier number.

HIPAA applies to Providers that electronically transmit one of the designated transactions, to all Health Plans, and to Clearinghouses

HIPAA regulations apply to the electronic exchange of specific information among the following entities:

• Health care providers of medical or health services that transmit one of the designated transactions electronically
• Health plans that provide, or pay the cost of, medical care
• Health care clearinghouses

Electronic Data Submission Methods

There are two primary ways that data are exchanged electronically:

1. File Exchange - File exchange uses application-to-application data transmission methods (in other words, files are being sent back and forth between computers). Providers that use File Exchange must:

• Send and receive a standard data element values for example, subscriber / insured relationship code(s)
• Send medical codes, e.g., ICD-9, that were valid at the time the service was provided to the patient

2. Web-based Exchange - Web-based exchanges are usually "real time" with an individual submitting data or interacting directly using a Web application.

Note: HIPAA transaction regulations apply to File exchanges and Web-based exchanges.

Electronic Connection Options

Providers may connect to health plans by:

1. Direct connection - These exchanges must occur in a HIPAA standard format.
2. Connection to a clearinghouse - These exchanges do not need to be in HIPAA standard format but must include HIPAA compliant data content, i.e., Codes Sets and Identifiers. The exchanges can be in a format that works for the provider and the clearinghouse. Providers should check with their clearinghouses for valid formats.

Testing and Certification

Testing your ability to transmit data is a good practice. Many health plans are now, or will soon be, testing transactions with providers and clearinghouses. Many health plans, clearinghouses, and practice management vendors provide information and assistance regarding the testing process.

Testing services are emerging. They offer "Certification", which is verification of an ability to transmit a HIPAA compliant transaction. Once certified, the assumption is that you can transmit your "outbound" transactions (e.g., submitting claims to payers or clearinghouses electronically) and, because they are HIPAA compliant, the payer or clearinghouse should not reject them. Certification does not eliminate the need for direct testing with your trading partners.

Be aware that certification is not recognized officially in the HIPAA regulations and the companies doing the certifying vary in their practices, what they certify, at what level they certify, and so on. Also, be aware that frequently there are fees involved with certification. We recommend that you research companies you are considering for certifying your transactions.

Other Sources of HIPAA Information

For additional background information, you may want to visit the U.S. Department of Health & Human Services Administrative Simplification Web sites at:

http://aspe.os.dhhs.gov/admnsimp/index.shtml
and
http://aspe.hhs.gov/admnsimp/bannertx.htm

These sites provide current and background information, links to relevant sites, a way to subscribe to receive HIPAA bulletins, and other beneficial "trusted source" information.

An excellent discussion of the concepts of HIPAA certification and testing, and recommendations for testing among trading partners, may be found on the Workgroup for Electronic Data Interchange Strategic National Implementation Process (WEDI SNIP) Web site at:

http://www.wedi.org/snip/public/articles/index%7E12.htm