HIPAA update: standards for health care electronic transactions finalized

The Department for Health and Human Services (HHS) has issued the final rule that will govern electronic exchanges of financial and administrative information in the health care industry. About 400 different formats currently exist for electronic health care claims. Once compliance with this rule is required (October 2002 for most health care entities to which the rule applies), a physician will be able to submit an electronic claim in the standard transaction format to virtually any health plan in the United States and the health plan will have to accept it. Under the rule, an electronic transaction involves information exchanges between two parties to carry out financial or administrative activities related to health care. Thus, health plans will be able to pay physicians, authorize services, certify referrals, and coordinate benefits using a standard electronic format for each transaction. Conflicting state laws will be superseded by the standards, although HHS is developing an exception process pursuant to HIPAA. HIPAA required HHS to adopt data and format standards, if possible, that were developed by private sector standards development organizations accredited by the American National Standards Institute (ANSI). When conducting a transaction covered by the rule, physicians are required to use applicable medical data code sets as specified in the implementation specification that is valid at the time the health care is furnished. Local and proprietary codes currently used by health plans can no longer be used in electronic transactions governed by the rule after the compliance date (October 16, 2002, except for small health plans, which have until October 16, 2003). This summary of the Standards for Electronic Transactions should not be construed as legal advice or an opinion on specific situations. Please consult an attorney concerning your compliance with HIPAA and the regulations promulgated thereunder.