Health Insurance Portability and Accountability Act (HIPAA) Transactions and Compliance Standards

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) is a multipart piece of legislation that is having a far-reaching effect on the way health care is managed and communicated. Cigna is HIPAA compliant and is committed to helping health care providers integrate HIPAA regulations into their business practices.

HIPAA regulations are designed to help protect patients’ medical records and other health information and simplify the administration of health care.

What is HIPAA?

The Health Insurance Portability and Accountability Act (HIPAA) is legislation enacted by the federal government to:

  • Ensure portability of health insurance
  • Reduce health care fraud and abuse
  • Protect the privacy and confidentiality of health information
  • Simplify the administration of health care systems

Who must comply with HIPAA?

Health plans, health care processing centers, and health care providers that conduct electronic transactions must comply. These are known as “covered entities.” To a lesser extent, employers and business associates of such entities are also affected.

How does Cigna meet Compliance Goals?

We have invested significantly to be HIPAA compliant and plan to continue this investment. We have a specialized team working to ensure that the company is compliant with HIPAA regulations. The team includes project managers, legal counsel, information and technology management personnel, and representatives from our business operations. The team has established a detailed work plan that includes an end-to-end analysis of our organization, as well as the implementation of projects necessary to promote compliance with these regulations.

What must providers do to remain HIPAA compliant?

Cigna recommends the following steps for providers:

  • Consult trusted legal counsel who is familiar with the HIPAA Privacy Rules and the Code Set and Transaction Regulations.
  • Contact your Clearinghouse and get guidance on how to comply with HIPAA.
  • Consult your Practice Management software vendor for information on how their software is HIPAA compliant.
  • Ensure your billing procedure implements compliance codes and medical code sets for the compliance date.
  • Talk to your Cigna contracting unit if you have questions about your contract and the codes to use for charges/reimbursement schedules.

EDI for Healthcare and HIPAA Compliance

What does EDI for healthcare have to do with HIPAA compliance? To understand this, it is useful to have a little information about the legislation.

HIPAA had several purposes. One of those goals was to make the American healthcare system more efficient. HIPAA Title II directs the Department of Health and Human Services (HHS) to establish national standards for processing electronic health care transactions. Additionally, the law requires health care organizations to implement secure electronic access to health data and comply with HHS privacy regulations.

The penalties for not complying with HIPAA are severe. Knowingly violating HIPAA can cost you as low as $10,000 per violation and as high as $550,000 per violation. But what does it mean to violate HIPAA?

When people talk about HIPAA compliance, they generally mean adherence to Title II regulations. There are several HIPAA compliance requirements in this section: the National Provider Identification Standard, the Transactions and Codes Standard, the HIPAA Privacy Rule, the HIPAA Security Rule, and the HIPAA Compliance Rule. .

HIPAA requires healthcare organizations to follow a standardized EDI mechanism for submitting and processing insurance claims. The logic behind this regulation is to make the administration of health care in the United States safer and more efficient. The rules apply to nine types of health care financial and administrative transactions used by payers, physicians, and other providers.

Before this rule went into effect, health care providers had their own local or proprietary codes. The landscape was confusing and difficult to navigate. Standardized codes reduced complexity for all parties.


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