Kerlak Enterprises - Reading Room

HIPAA - In Daily Practice by Charles Dinkins and Allan Gilbreath

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) was passed into law by the U.S. Congress as Public Law 104-191, and states its purpose as:

to improve portability and continuity of health insurance coverage in the group and individual markets, to combat waste, fraud, and abuse in health insurance and healthcare delivery, to promote the use of medical savings accounts, to improve access to long-term care services and coverage, to simplify the administration of health insurance, and for other purposes.

HIPAA, also known as the Kennedy Kassebaum bill, includes a number of sections or titles, covering topics such as continuation of health insurance, privacy of patient records, security relating to electronic protected health information, and how the healthcare providers, clearinghouses, and payers should transfer that information.

Market pressures to maximize profitability have driven many companies in the healthcare industry to view their patient lists and medical information as valuable marketing tools. The prescription drug market can produce millions of dollars of revenue for any pharmaceutical company that can bring a popular drug to market. Part of the success of any new product is reaching the proper audience. With targeted marketing, a pharmaceutical company can reach patients with specific conditions that would make them probable consumers of their products.

Certain diseases and conditions, such as cancer and HIV, carry with them expensive, long term management programs. As more diseases become antibiotic resistant, the management and treatment of these conditions grows more complex. The expense of new research and development is passed along to the consumer and their insurance providers. This process has resulted in higher rates for healthcare.

Corporations that self insure could easily use an employee’s health records to make decisions about his or her career potential. As companies are forced to cut expenses and attempt maximize profitability, looking into an employee’s health records could allow them to forecast likely healthcare expenses and take measures to minimize their risks.

The Internet now makes it extremely simple to disseminate information to the entire world in just a few keystrokes. The cost of doing business using paper-based methods is ever increasing while the costs of using computer-based technologies are constantly decreasing. Privacy groups across the country are increasingly alarmed at the eroding privacy of individuals due to massive databases tracking everything from credit card purchasing habits to driver’s licenses.

It is estimated that hundreds of millions of dollars have been lost by the Medicare and Medicaid insurance programs due to abuse, waste, and fraud. Every year, auditors find that disreputable providers and suppliers have developed imaginative ways of defrauding these programs. The sheer size and complexity of these programs, partly due to political influences, create a great deal of administrative paperwork and other burdens on all those involved.

HIPAA was developed to help address these concerns at a national level. It is the purpose of HIPAA to improve the Medicare and Medicaid programs, and the efficiency and effectiveness of the healthcare system, by encouraging the development of health information systems through the establishment of standards and requirements for the electronic transmission of certain health information. National standards will provide a baseline for the privacy and security of personal medical information, as well as standards for the electronic transmissions of administrative and financial transactions. This means that the entire healthcare industry can work from the "same page".
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