HIPAA Transactions

The Health Insurance Portability and Accountability Act’s Transactions and Code Sets rules are an essential aspect of regulations. Although HIPAA is more widely known for its role in revolutionising data protection and privacy laws in the US, the regulations also play a critical role in improving administrative efficiency in the healthcare industry.

The Transactions and Code Sets Rules introduce standards for electronic transactions that involve patient information between HIPAA covered entities (CEs). HIPAA CEs include health plans, health care clearinghouses, and health care providers. Before HIPAA, local and proprietary codes were used.

HIPAA’s transaction rules cover electronic transactions over the Internet or private networks. Its scope also extends to transmissions which involve a physical object being transferred from one location to another, such as a CD containing patient information.

It was hoped that by removing the administrative burden on the healthcare industry, the overall patient experience would be improved.

The national standards for electronic exchange of healthcare transactions were introduced in 1996 when President Bill Clinton signed HIPAA into law. These standards are known as the Electronic Data Interchange (EDI) standards and apply to several types of administrative and financial transactions in the healthcare industry. These standards simplify electronic transactions, by introducing standard formats for these transactions to replace the hundreds of local and proprietary formats that existed before HIPAA.

This includes:

  • Claims submissions
  • Enrollment and disenrollment in a health plan
  • Health care payment to a provider (with remittance advice)
  • Premium payment to health insurance plans
  • Claim status request and response
  • Referral certification and authorisation
  • Claims attachment
  • First report of injury
  • Eligibility for a health plan

HIPAA Code Sets

HIPAA considers a Code Set to be any set of codes used for encoding data elements, such as medical terms, medical concepts, medical diagnosis codes, and medical procedure codes. Code sets for medical data are required for administrative transactions under HIPAA for diagnoses, procedures, and drugs.

HIPAA requires the healthcare industry to use medical data code. These code sets include codes for:

  • Health-related problems and their manifestations
  • Causes of injury, disease or impairment
  • Actions are taken to prevent, diagnose, treat, or manage diseases, injuries, and impairments
  • Any substances, equipment, supplies, or other items used to perform these actions

HIPAA specifies that the healthcare industry should use the following five code sets for electronic transactions:

  • International Classification of Diseases (ICD)
  • Current Procedural Terminology (CPT)
  • HCFA Common Procedure Coding System (HCPCS)
  • Code on Dental Procedures and Nomenclature (CDT)
  • National Drug Codes (NDC)

It is a vital aspect of HIPAA compliance that organisations implement the use of these codes and follow the transaction rules for all electronic transactions of PHI. The implementation of the codes may be a laborious, time-consuming, and costly task. Although the implementation period may be difficult, the overall benefits of using HIPAA-compliant codes cannot be understated.

Following HIPAA’s Transactions and Code Sets Rule allows creates a more streamlined service, and this improved efficiency leads to fewer overhead costs in the long term. Furthermore, considering the hefty penalties levied against non-compliant organisations, adopting HIPAA’s Transaction and Code Sets Rule is essential.