Legislative Background

20.1 - Legislative Background (Rev. 2803, Issued: 10-28-13, Effective: 09-17-13, Implementation: 09-17-13) EDI practices for healthcare business were embraced more than 20 years ago to standardize electronic formats throughout the healthcare industry. Usage of EDI in Health care claim processing was initiated by the Health Insurance Portability and Accountability Act of 1996(HIPAA), Public Law 104,191. Subtitle F of Title II of HIPAA, added to Title XI of the Social Security Act (the Act) a new part called section C, entitled “Administrative Simplification” and consists of sections 1171 through 1180. This Federal legislation adopted standards for electronic transactions under an Administrative Simplification subtitle. HIPAA mandated the adoption of standards for electronically transmitting certain health care administrative transactions between all covered entities. Sections 1171 through 1179 are described below: • Section 1171 of the Act, established definitions for the following: code sets, health care clearinghouses, health care provider, health information, health plan, individually identifiable health information, standard, and standard setting organizations (SSO) such as the American National Standards Institute (ANSI). • Section 1172 made any standard adopted applicable to covered entities that transmit health information in electronic formats. Covered entities include the following: 1) health plans 2) health care clearinghouses 3) health care providers • Section 1173 required the adoption of standards for transactions, code sets, and unique health identifiers for each individual, employer, health plan, and health care provider. • Section 1174 required the adoption of standards for designated transactions, except electronic attachments. • Section 1175 prohibited health plans from refusing to conduct a transaction as a standard transaction, and delaying the processing and or adversely affecting its processing. • Section 1176 established civil monetary penalties for violation of the provisions of Part C of Title XI. • Section 1177 established penalties for any person that knowingly misuses a unique health identifier, or obtains or discloses individually identifiable health information. • Section 1178 indicated provisions of Part C of Title XI of the Act, as well as any standards or implementation specifications adopted under them generally supersede contrary provisions of State law. • Section 1179 makes these provisions of the Act inapplicable to financial institutions or anyone acting on behalf of a financial institution when “authorizing, processing, clearing, selling, billing, transferring, reconciling, or collecting payments for financial institutions. HIPAA mandates all covered entities to comply with the use and maintenance of certain standards. More recently the passing of The America Reinvestment and Recovery Act (ARRA) has further enhanced the definitions and requirements mandated under HIPAA.