From a historical perspective, The Health Insurance Portability and Accountability Act (HIPAA) was enacted under President Bill Clinton in 1996. The law was passed primarily for continuity of healthcare coverage for individuals changing jobs. The law includes important provisions that affect multiple entities dealing with healthcare information and data transfer in general.

HIPAA can be confusing to most people as its widespread implementation and enforcement is still not uniform across the country. Simply speaking, insofar as transcription companies are concerned, HIPAA regulations cover requirements to ensure the security and privacy of individuals' protected health information (PHI). Another key objective of HIPAA standards is to maintain the right of individuals to keep information about them private.

The Department of Health and Human Services is responsible for developing and issuing regulations to address these requirements. HIPAA's "Administrative Simplification" provision is composed of four parts, each of which has generated a variety of "rules" promulgated by the Department of Health and Human Services. The four parts of Administrative Simplification are:

1. Standards for Electronic Transactions
2. Unique Identifiers Standards
3. Security Rule
4. Privacy Rule
   
   

The term "Electronic Health Transactions" includes health claims, health plan eligibility, enrollment and disenrollment, payments for care and health plan premiums, claim status, first injury reports, coordination of benefits, and related transactions.

In the past, health providers and plans have used many different electronic formats to transact medical claims and related business. Implementing a national standard is intended to result in the use of one format, thereby "simplifying" and improving transactions efficiency nationwide.

Virtually all health plans must adopt these standards. Providers using non-electronic transactions are not required to adopt the standards for use with commercial healthcare payers. However, electronic transactions are required by Medicare, and all Medicare providers must adopt the standards for these transactions. If they don't, they will have to contract with a clearinghouse to provide translation services.

Health organizations also must adopt standard code sets to be used in all health transactions. For example, coding systems that describe diseases, injuries, and other health problems, as well as their causes, symptoms and actions taken must become uniform. All parties to any transaction will have to use and accept the same coding, for the purpose of reducing errors and duplication of effort. Fortunately, the code sets proposed as HIPAA standards are already used by many health plans, clearinghouses and providers, which should ease transition to them.

In the past, healthcare organizations have used multiple identification formats when conducting business with each other - a confusing, error-prone and costly approach. It is expected that standard identifiers will reduce these problems. The Employer Identifier Standard, published in 2002, adopts an employer's tax ID number or employer identification number (EIN) as the standard for electronic transactions. Final standards for Provider and Health Plan identifiers have not yet been published.

The final Security Rule was published on February 20, 2003 and provides for a uniform level of protection of all health information that is housed or transmitted electronically and that pertains to an individual. The Security Rule requires covered entities to ensure the confidentiality, integrity, and availability of all electronic protected health information (ePHI) the covered entity creates, receives, maintains, or transmits. It also requires entities to protect against any reasonably anticipated threats or hazards to the security or integrity of ePHI, protect against any reasonably anticipated uses or disclosures of such information that are not permitted or required by the Privacy Rule, and ensure compliance by their workforce. Required safeguards include application of appropriate policies and procedures, safeguarding physical access to ePHI, and ensuring that technical security measures are in place to protect networks, computers and other electronic devices.

The Security Standard is intended to be scalable; in other words, it does not require specific technologies to be used. Covered entities may elect solutions that are appropriate to their operations, as long as the selected solutions are supported by a thorough security assessment and risk analysis.

The Privacy Rule is intended to protect the privacy of all individually identifiable health information in the hands of covered entities, regardless of whether the information is or has been in electronic form. The rule establishes the first "set of basic national privacy standards and fair information practices that provides all Americans with a basic level of protection and peace of mind that is essential to their full participation in their care".

• Give patients new rights to access their medical records, restrict access by others, request changes, and to learn how they have been accessed
• Restrict most disclosures of protected health information to the minimum needed for healthcare treatment and business operations
• Provide that all patients are formally notified of covered entities' privacy practices,
• Enable patients to decide if they will authorize disclosure of their protected health information (PHI) for uses other than treatment or healthcare business operations
• Establish new criminal and civil sanctions for improper use or disclosure of PHI
• Establish new requirements for access to records by researchers and others
• Establish business associate agreements with business partners that safeguard their use and disclosure of PHI.
• Implement a comprehensive compliance program, including
• Conducting an impact assessment to determine gaps between existing information practices and policies and HIPAA requirements
• Reviewing functions and activities of the organization's business partners to determine where Business Associate Agreements are required
• Developing and implementing enterprise-wise privacy policies and procedures to implement the Rule
• Assigning a Privacy officer who will administer the organizational privacy program and enforce compliance
• Training all members of the workforce on HIPAA and organizational privacy policies Updating systems to ensure they provide adequate protection of patient data