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HIPAA: A Nuisance or an Opportunity? Published: Sunday, October 20, 2002 By: Dr. Angel L. Rivera

Traditional medical practice in the 19th Century and during a substantial part of the 20th Century involved the interaction of the two main parties in the diagnostic-therapeutic process: the physician and the patient. Come a third stakeholder into the system with the name of pre-paid medical insurance and the administrative complexity and the consequent increased overhead is introduced. Add other factors as tremendous advances in technology, poor planning in a health care system which is in complete disarray and you inevitably have the skyrocketing health care costs that have characterized most of the last 3 decades accelerated, no doubt, by the Medicare and the Medicaid programs. Several cost-containment measures have been implemented throughout the years to curb this trend but they have either failed or have achieved just partial success.

With that in mind the Bush Administrations gathered a group of health care industry leaders who were asked to devise a new scheme to curtail administrative costs in that industry. It was decided that the Workgroup for Electronic Data Interchange-it was called so-was to address the standardizations of health care transactions as a means to curtail the inefficiency of having to deal with multiple forms and health care code sets. For example, about 400 different formats exist today for health care claims. It was seen as a good step in the direction of reducing overhead expenses for providers of health care services and medial insurance companies.

After much maneuvering in the quagmire of public policy development, the United States Congress enacted the Health Care Portability and Accountability Act (HIPAA) or Public Law 104-191 in August 21, 1996.Paramountin its multiple provisions is the subtitle F of the Title II of the Law called Administrative Simplification. One of the most important aspects of the Administrative Simplification is the Electronic Transactions and Code Sets Rule where the use of the electronic means with the concurrent standardization of formats and codes is encouraged or mandated. Because the use of electronic means in health care transactions opens a window of vulnerability for unauthorized access to protected medical information other rules enacted for the protection of such information. So, two more elements were added: The Privacy Rule and the Security Rule of HIPAA.

Although heralded in some circles as an expression of technological change the truth of the matter is that Administrative Simplification is more consonant with management change, that is, it deals more with analysis and the formulation of charges in policies concerning the administration and the people who provide the decisions and the supervision necessary to implement the organization objectives and achieve stability and growth. Technology is only accessory in achieving such goals.

We can view HIPAA as an untimely burdensome and expensive intrusion into an already battered industry which has been badly shaken by a local health reform and an unjust and disadvantageous Medicare reimbursement formula. On the other hand, we can grasp a much-needed opportunity to review all processes and systems, particularly health care providers that include hospitals and physicians and dentist offices. We can focus on the part of the Administrative Simplification provisions that call for operations analysis and improved operations management, the development of appropriate policies and procedures, the standardization of forms and codes and the establishment of adequate information. We would be dealing with, as the end product, improvement in workflow and consequently in increased efficiency and better quality of health care services.

HIPAA will force health care professionals, particularly physicians and dentists, to get more involved in their practice management affairs and will propel them in making the transition from a simple medical or dental practice (no longer sustainable) to one more attuned to the demands of a new paradigm (not necessarily wanted but unavoidable) in health care.

So we may either complain (will not get too far because compliance is mandatory by law) or we can make the most of it.

It is a decision each one of us has to make.


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