HIPAA Implementation Won't Be Easy

ARE STATE AND LOCAL GOVERNMENTS READY FOR ANOTHER TEST OF THEIR INFORMATION TECHNOLOGY SKILLS AND STAMINA? We'll soon find out. By August 2002, the entire health-care industry must comply with the federal government's new regulations as specified under the Health Insurance Portability and Accountability Act (HIPAA). That means every government health service, from municipal hospitals and county health clinics to state Medicaid programs, must have an entirely new set of standards in place for electronically managing medical information and records or face penalties.

by / November 30, 2000
Still not impressed? HIPAA is the biggest change to the nation's health-care program since the inception of Medicare. Some say the work needed to render information systems HIPAA-compliant will make Y2K look like a cakewalk. Compliance costs are expected to be equally extravagant. Rumors are rife that some health-care providers and programs, especially the smaller ones, will revert entirely back to paper rather than deal with the new regulations.

Like many federal mandates, the goals of HIPAA are important, yet the means for reaching them leave something to be desired. While Congress and President Clinton couldn't concur on a universal health-care insurance plan, they did agree that citizens deserved better coverage, improved privacy and lower costs. The result was HIPAA, a set of regulations passed by Congress and signed into law by Clinton that are meant to close gaps in health-insurance portability, protect the privacy of personal health information and simplify the reporting and billing of medical transactions.

This latter mandate has been praised by some health-care experts as a huge benefit that will wring significant cost savings from our bloated health-care system, and has been cursed by many providers and program directors as an unrealistic solution to a complicated problem. Called "administration simplification," it's anything but simple, according to state Medicaid administrators, who have the onerous task of replacing dozens of unique claims codes with a standardized set that relies on electronic data interchange (EDI) to work.

EDI, which involves the computer-to-computer transmission of data in standard formats, has been popular in the transportation industry where the big three automakers have had the power to tell their suppliers to use EDI, or else. Unfortunately, when used in government, EDI has never worked to its full extent. It has acted as a barrier to small suppliers and providers that want to participate in the state and local markets. In state Medicaid programs, which provide unique services to disadvantaged clients, EDI has been incompatible with the special code sets used for transactions. Despite these problems, the federal government has decided to forge ahead with EDI as the universal standard for health care.

So far, attempts by state officials to garner some leeway with these regulations have met with little success. Already, the first nine standard transaction codes have been set. More standards are on their way, including standards for privacy.

As the HIPPA article in this month's Government Technology points out, states have little time left to adjust their budgets and set their battle plans for dealing with the latest, large-scale information system overhaul to hit in two years. Unlike Y2K, which was mainly a technology glitch for programmers and project managers to fix, HIPAA has legal, regulatory and security issues, along with the technology problem. In addition, state Medicaid programs must contend with all the providers, state agencies and other programs within Medicaid with whom they exchange data.

As one state official pointed out, HIPAA forces government health-care administrators to deal with an unending number of choices and decisions. Not surprisingly, words like complicated and expensive come up a lot when discussing HIPAA with health-care experts and government officials. Of course, the same was said about Y2K, and look what happened. Will history repeat itself? Wait and see.


By Tod Newcombe, Features Editor

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Tod Newcombe Features Editor